Here's What Your Grocery Cart Will Cost With New GST Regime

India’s dynamic Goods and Services Tax (GST) regime has recently undergone notable revisions. Such a change and revision of rates has particularly impacted the food and beverages sector. A change that was aimed at rationalizing tax structures and boosting the revenue of the country has sparked widespread interest as well as debates. From everyday staples to restaurant dining, the revised GST rates are reshaping consumer costs and industry strategies alike. Understanding as to how these updates are essential for businesses, policymakers, and consumers helps in navigating India’s evolving economic landscape. Here’s a comprehensive look at the revised GST food and beverages rates. 

How the revised GST rates have been applied to the food & beverages sector 

At the 56th meeting of the GST Council, which was held on Wednesday, an approval for a complete overhaul of India’s GST slabs on various foods and beverages has been officially decided upon. The meeting, which was chaired by the Union Finance Minister, Nirmala Sitharaman, the key GST changes and their applications are said to be effective starting September 22, 2025. 

1. Streamlined tax structure 

With the revised GST rates, the council has now reduced India’s GST slabs from four to a simplified structure of nil (0%), 5%, 18%, and a new 40% slab for luxury and ‘sin’ goods. 

2. Tax free essentials 

With the new GST reforms on food and beverages, several daily consumption food and beverage items are set to become more affordable. With the biggest tax cuts having been made on food, medicines, essential items, green energy, farm goods, small cars and bikes, there are also a number of essentials that have become tax free. 

Items like UHT milk, roti, paratha, khakhra, pizza bread, and unpackaged paneer (chena) are now completely exempt from GST. 

3. Higher rates for sugary items and caffeinated drinks 

Although a number of daily essentials have witnessed a significant cut on the GST, items such as soft drinks and caffeinated beverages will become costlier. Attracting a new GST 40%, the new rates merge both the previous cess and GST. 

4. Uniform treatment for previously conflicting categories

Ambiguous classifications, such as popcorn, which can be sold loose or packaged have now been unified under the same GST on popcorn slab for consistency. 

5. Restaurants benefit from lower GST 

Dining out has become significantly cheaper with the revised GST food rates. Restaurant meals now attract a flat 5% GST, down from the earlier 12-18% range. 

List of items that will become cheaper

1. Tax free items- UHT (ultra-high temperature) GST on milk, packaged paneer (chhena), pizza bread, rotis, khakhras, and paranthas will be charged no tax, which is a cutdown from the current rate of 5%.
2. Items now at 5% GST- Dairy products and spreads like GST on butter, ghee, cheese and condensed milk have witnessed a cut from 18% to 5%. Other items include biscuits, cakes, pastries, cocoa products, sauces, pickles, ice creams, soups, nuts and dry fruits, along with confectionary items, namkeens, plant based milk drinks, and savory snacks like sausages and meat among others.

List of items that will get costlier 

1. Carbonated beverages- The GST on soft drinks, along with other non-alcoholic beverages will become costlier now, attracting a GST of 40% from the current rate of 28%.
2. Caffeinated drinks- Caffeinated drinks will also become costlier, as the GST on drinks for these items have been increased to 40% as well.
3. All goods with added sugar- All goods that contain added sugar or other sweetening agents, including aerated waters will also be taxed at 40%.

GST on popcorn 

The GST rates on popcorn has become a much debated topic since last year itself. With the current GST on popcorn differing from 5-18% depending on the packaging and flavour of popcorn, the revised GST on popcorn is much simplified. As per the revised rates, salted or spiced popcorn will attract a 5% GST, even if they are sold loose or packaged. Caramel popcorn will now be taxed at 5% as well, which is in line with the revised rates of other sugar confectionary food items. 

Government’s rationale behind revising GST rates 

The government’s rationale behind the revision of GST rates is to simplify the tax structure, enhance compliance, and boost consumption while aligning with evolving economic priorities. By reducing the number of tax slabs and categorising goods more clearly, the revised GST rates aim towards eliminating classification disputes and reducing litigation. Essential food items have been made tax free or brought under a lower tax slab to ease the burden on households. On the other hand, luxury, sin, and unhealthy products now attract higher rates, which has been done to discourage their consumption and increase revenue.