Notification No. 9/2025 – Central Tax (Rate) issued on 17 Sep 2025 updates GST rates across schedules and introduces GST 2.0 reforms effective from 22 Sep 2025. Below is a cleaned, HSN-wise summary plus practical takeaways for businesses.

Schedule I
2.5% — Essentials
Schedule II
9% — Standard goods
Schedule III
20% — Luxury
Schedule IV
1.5% — Precious metals & jewellery
Schedule V
0.125% — Rough diamonds & stones
Schedule VI
0.75% — Gold & select items
Schedule VII
40% — Sin & Luxury

Schedule I – 2.5% GST

This schedule covers essential goods and daily consumables. The government keeps these items in the lowest bracket to reduce the tax burden on common people. Examples include:

  • Dairy products – milk, curd, lassi, butter milk, ghee, cheese
  • Cereals – rice, wheat, maize, barley, oats (pre-packaged and labelled)
  • Pulses and flour – dals, gram flour, suji, atta
  • Dried fruits and nuts – almonds, walnuts, raisins, cashews
  • Tea, coffee, spices – pepper, cardamom, cloves, turmeric
  • Medicines – life-saving drugs, diagnostic kits

This category ensures that food security and healthcare essentials remain affordable.

Schedule II – 9% GST

Goods in this schedule attract a moderate GST rate of 18% (9% CGST + 9% SGST). These are considered standard-use products consumed by middle-income groups and industries. Examples include:

  • Packaged foods, biscuits, ready-to-eat products
  • Soaps, shampoos, cosmetics, and personal care items
  • Household plastic and steel items
  • Electrical appliances of common use
  • Most processed foods and beverages

This rate balances revenue needs with affordability for consumers.

Schedule III – 20% GST

This is a higher tax bracket applicable to luxury and specialized products. These are non-essential or high-value items. Examples include:

  • High-end processed food and beverages
  • Luxury toiletries and cosmetics
  • Special industrial inputs not classified as essentials
  • Premium-grade lifestyle products

The objective is to impose higher tax on luxury consumption while keeping basics cheaper.

Schedule IV – 1.5% GST

This concessional slab applies mostly to precious metals and jewellery. The government keeps a low rate to support the gems and jewellery industry, which is export-driven. Examples include:

  • Gold and silver jewellery
  • Precious metal alloys
  • Small jewellery parts

It strikes a balance between revenue collection and industry support.

Schedule V – 0.125% GST

This is an ultra-low tax rate applied on rough diamonds and precious stones. The intention is to encourage India’s diamond polishing and trading sector. Examples:

  • Rough diamonds
  • Precious and semi-precious stones (unworked)

This keeps India competitive in global diamond trade.

Schedule VI – 0.75% GST

This schedule covers select goods like gold and semi-precious materials where tax impact needs to be minimized. Examples:

  • Gold used in certain forms
  • Special semi-precious stones

This concessional rate ensures smoother trade in bullion markets.

Schedule VII – 14% GST

This is the highest GST slab (28% combined with SGST). It applies to luxury and sin goods, designed to discourage consumption of harmful or non-essential items. Examples include:

  • Automobiles and SUVs
  • Tobacco and related products
  • High-end consumer durables
  • Luxury goods like premium watches and expensive beverages

The purpose is both revenue generation and discouraging luxury/sin consumption.

GST 2.0 – Major Reforms

The GST Council simplified slabs to 5% and 18%, with a special 40% rate for luxury & sin goods. Several essentials moved to Nil (0%) GST. Below is a breakdown by sector and HSN:

Class / Sector Example HSN & Items Old Rate New Rate Remarks
Food & Agro Products HSN 0401 (UHT Milk)
HSN 0406 (Paneer)
HSN 1701/1702 (Sugar)
HSN 1901 (Prepared cereals)		 5–12% 0–5% Staples & dairy essentials made cheaper.
Healthcare / Medical Devices HSN 3004 (Life-saving drugs, devices) 5% 0% Critical healthcare exempted from GST.
Textiles / Apparel HSN 5401 (Man-made fibres)
Premium apparel > ₹2,500		 12–18% 5–18% Affordable fibres down to 5%; premium wear at 18%.
Automobiles / Vehicles HSN 8703 (Small cars)
HSN 8711 (Motorcycles ≤ 350cc)
Luxury SUVs & big bikes		 28% 18% (regular)
40% (luxury)		 Mass vehicles cheaper, luxury taxed higher.
Household & Personal Care HSN 33 & 34 (Soaps, shampoos, toothpaste, brushes) 18% 5% Everyday use items made more affordable.
Building Materials HSN 2523 (Cement)
HSN 6802 (Marble, granite)		 28% 18% Construction sector relief.
Carbonated / Sin Goods Aerated drinks, sugary beverages
Pan masala, gutkha, cigarettes		 28% + cess 40% Higher tax on luxury & harmful items.
Insurance / Services Life & Health Insurance 18% 0% Now exempted.

Key Takeaways of GST 2.0

  • Essentials like food, healthcare, and personal care are cheaper.
  • Luxury items and sin goods taxed at a higher 40% rate.
  • Construction materials like cement and marble moved from 28% to 18%.
  • Businesses must update billing software and invoices with new HSN-wise GST rates.

Download Official Notification

Download Notification 09/2025 (PDF)

FAQs

What is HSN code in GST?

HSN stands for Harmonized System of Nomenclature — an 8-digit code used to classify goods and determine applicable GST rates.

When do the new rates apply?

The revised rates are effective from 22 Sep 2025. Businesses should transition systems and billing accordingly.

Which items are exempt now?

Life-saving drugs, certain dairy products like paneer and milk, and basic food staples are moved to 0% where listed in the notification.

Why are there multiple GST schedules?

Different goods have different importance in daily life. Essentials are taxed lower, while luxury and harmful items are taxed higher to ensure fairness.

How do I know which schedule my product falls into?

You need to identify the correct HSN code for your product and cross-check it with the official PDF notification.