The GST Council has introduced a major revision of tax rates

Current Context: 56th GST Council Meeting Held on September 3–4, 2025, in New Delhi Chaired by Finance Minister Nirmala Sitharaman.

• Revised GST rates will be effective from 22 September 2025 across all states and union territories.
• The previous four-slab system (5%, 12%, 18%, 28%) is replaced by three slabs: 5%, 18%, and 40%.
• GST-exempt (0%) items include Ultra-High Temperature (UHT) milk, paneer, pizza bread, khakhra, and plain roti/paratha.
• 5% GST applies to hair oil, soap, toothpaste, biscuits, chocolates, dry fruits, school supplies, and bamboo furniture.
• 18% GST now covers small cars, motorcycles ≤350cc, TVs, ACs, and cement—reduced from 28%.
• A new 40% GST slab targets luxury and sin goods like cigarettes, pan masala, sugary drinks, yachts, and private aircraft; Life and Health Insurance are now fully GST-exempt.
• Amendments to Section 15 and Section 34 will allow tax adjustments via credit notes, even if discounts aren’t pre-agreed or shown on invoices. 
• Buyers must reverse Input Tax Credit (ITC) proportionately, ensuring fair treatment and reducing litigation.

Question:

Q.1 Which GST slab is newly introduced for luxury and sin goods like cigarettes, pan masala, sugary drinks, and yachts?
a) 12%
b) 18%
c) 28%
d) 40%

Answer: d) A 40% GST slab was created specifically to tax luxury and sin goods at a higher rate.