GST Reform: These Items Will Have the Highest Tax From Monday
From Monday, September 22, 2025, India is set to enter a new phase of Goods and Services Tax (GST) reform—often being called GST 2.0. The government is simplifying the GST structure, cutting rates on many essential goods, services, and household items, while simultaneously introducing higher levies on “luxury”, “sin”, and non-essential goods.
One of the major changes is the introduction of a 40% tax slab for certain goods, which will become the highest GST rate from Monday. Below, we look at what kinds of items are moving into this top bracket, and how the reform may affect consumers.
What changed: A quick recap
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The previous four (or more) GST slabs — 5%, 12%, 18%, 28% — are being rationalized.
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Most commonly used items are being shifted to lower tax rates: 5% or 18% slabs.
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But the new structure has a de-merit / luxury / sin category that will attract a much higher rate — 40%. This replaces or subsumes the old Compensation Cess and other surcharges on some goods.
Items that will attract the highest GST (40%) from Monday
Here are the categories and items that will face the 40% GST slab under GST 2.0:
| Category | Examples of Items |
|---|---|
| Sin goods / Tobacco | Cigarettes, beedi, pan masala, gutka, chewing tobacco, manufactured tobacco substitutes, tobacco extracts, etc. |
| Aerated & Sugary Drinks | Soft drinks, fizzy beverages, carbonated fruit drinks or beverages with artificial sweeteners, flavoured carbonated water etc. |
| Luxury / Ultra-Luxury Vehicles & Items | High-end cars (especially over certain engine capacity / length), super bikes, private aircraft, yachts, etc. |
That is, from Monday onward, these goods will carry the highest GST burden in the revamped tax framework. The 40% rate replaces earlier arrangements where many of these goods were taxed at 28% plus additional cess(es).
Why the government introduced the 40% slab
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To rationalize compensation-cess and other extra levies into a unified rate.
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To send a signal to reduce consumption of sin goods, luxury items and non-essentials, aligning tax policy with public health and fiscal goals.
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To simplify tax compliance: fewer slabs, clearer classification. Essentials get relief, luxuries / sin goods pay more.
What this means for consumers & businesses
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If you buy items like premium vehicles, super bikes, or soft drinks, expect higher prices due to 40% GST.
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Businesses dealing in these items will have to revise pricing, adjust input cost absorption, and ensure their accounting / taxation systems are updated.
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For many other items (groceries, essentials, common household goods, daily use personal care), tax rates are being reduced. So, a large portion of consumer spending will see relief.
SEO & Planning Tips
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If you’re a small business, especially in categories affected by the 40% slab, get your inventory and pricing ready. Update billing software, communicate with customers.
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Consumers should check new MRPs for items they recently bought or are about to buy. Some might try to push old stock at old MRPs or try to delay changes. Awareness is key.
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For content creators: using keywords like “GST 2.0”, “items 40 percent GST”, “sin goods 40% tax”, “luxury goods GST filing”, etc., will help reach audiences looking for these changes.
Final Word
GST reform from 22 September 2025 brings major shifts: many goods will be cheaper, essential items will get relief, but luxury, sin, and non-essentials will carry the highest tax burden under the new 40% slab. If you’re purchasing or dealing with such goods, factor in the higher tax. For the rest of the economy, this could be a welcome relief.