The Ministry of Finance has issued Notification No. 9/2025-Integrated Tax (Rate) dated 17th September 2025, bringing a landmark revision to the Integrated GST (IGST) rate structure applicable on inter-State supplies of goods.
This notification, effective 22nd September 2025, supersedes Notification No. 01/2017-Integrated Tax (Rate) and introduces a seven-schedule framework for IGST rates.
It represents the most significant reset of GST slabs since the introduction of GST in 2017, aiming to simplify classification, reduce disputes, and align taxation with policy objectives.
Key Highlights of the Notification
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Supersession of 2017 Framework: Notification No. 01/2017 is replaced, though all past actions remain valid.
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Seven-Category Structure: Goods are reorganised into schedules ranging from 0.25% to 40%, providing clarity on essentials, industrial goods, luxury, and demerit items.
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Effective Date: New slabs apply from 22nd September 2025 on all inter-State supplies.
IGST Rate Schedules (Effective 22nd Sept 2025)
5% – Schedule I (Essentials & Agriculture-Based Goods) – 516 entries
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Food staples: Rice, wheat, pulses, cereals, flour, sugar, jaggery.
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Dairy products: Milk powder, curd, lassi, ghee, butter.
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Healthcare: Life-saving medicines, insulin, diagnostic kits, oral rehydration salts.
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Agriculture inputs: Fertilisers, pesticides, seeds, organic manures.
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Energy & mobility: Solar panels, biogas plants, electric vehicles.
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Daily use: Handloom textiles, footwear priced below ₹2,500.
18% – Schedule II (Standard Rate) – 640 entries
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Electronics, consumer durables, household appliances.
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Processed foods, packaged snacks, beverages.
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Construction materials: cement, tiles, paints.
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Branded apparel & footwear above ₹2,500.
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Industrial goods: plastics, chemicals, paper products.
40% – Schedule III (Luxury & Demerit Goods) – 13 entries
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Luxury cars and SUVs.
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Aircraft and yachts for personal use.
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Select notified demerit goods.
3% – Schedule IV (Precious Metals & Select Goods) – 15 entries
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Gold, silver, platinum jewellery.
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Certain imitation jewellery.
0.25% – Schedule V (Precious Stones) – 3 entries
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Rough diamonds.
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Unworked or lightly worked semi-precious stones.
1.5% – Schedule VI (Special Items) – 2 entries
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Polished diamonds.
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Notified jewellery and handicrafts.
28% – Schedule VII (Luxury & Sin Goods) – 6 entries
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Aerated waters, carbonated beverages, energy drinks.
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Tobacco and substitutes.
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High-end and luxury automobiles.
Sectoral Impact Analysis
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Agriculture & Food – Essential commodities stay under 5%, keeping basic consumption affordable.
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Healthcare – Concessional rates on medicines ensure continuity of public health support.
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MSMEs & Retail – Footwear and apparel under ₹2,500 attract only 5%, offering relief to small retailers.
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Luxury & Lifestyle – Luxury automobiles, beverages, and tobacco continue under high slabs (28%–40%) to discourage conspicuous consumption.
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Jewellery & Gems – Low-rate slabs (0.25%, 1.5%, 3%) safeguard India’s gem and jewellery exports, maintaining competitiveness.
Compliance Checklist for Businesses
- Map HSN codes to the revised schedules without delay.
- Update ERP & billing software to reflect the new tax masters.
- Align supplier contracts to avoid ITC mismatches.
- Communicate revised rates to distributors and customers.
- Revisit pricing/tax clauses in inter-State agreements.
Practical Illustrations
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Packaged rice → 5% (Schedule I)
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LED television → 18% (Schedule II)
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Luxury SUV → 28% (Schedule VII)
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Rough diamonds → 0.25% (Schedule V)
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Polished diamonds → 1.5% (Schedule VI)
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Aerated soft drink → 28% (Schedule VII)
Final Professional Insight
This notification is not merely a rate adjustment—it is a classification and compliance overhaul. By consolidating goods into seven schedules, the government seeks to minimise disputes, improve clarity, and strengthen revenue mobilisation.
Businesses must act swiftly to realign their product classification, update IT systems, and train staff ahead of the 22nd September 2025 deadline. Failure to adapt may lead to misclassification risks, ITC mismatches, and potential litigation.
For a complete compliance view, also read our companion post: [ITC under New IGST Slabs – Rule 42/43, Inversion & Compliance Risks from Sept 2025]
