Ministry of Finance Notifies Revised Integrated Tax Rates and Exemptions

The Government of India has recently issued a series of notifications under the Integrated Goods and Services Tax (IGST) Act, 2017, aimed at revising tax rates and exemptions for inter-State supplies of goods. These notifications, effective from September 22, 2025, are designed to streamline tax structures, promote public interest, and align with the recommendations of the GST Council. Below, we delve into the key highlights of these notifications and their implications.

Notification No. 9/2025-Integrated Tax (Rate): Revised Tax Rates 

This notification supersedes the earlier Notification No. 01/2017-Integrated Tax (Rate) and introduces updated tax rates for inter-State supplies of goods. The rates are categorized into seven schedules, each specifying the applicable tax percentage for different goods:

Schedule I – 5% Tax Rate Includes essential goods such as live horses, milk and cream, concentrated or containing added sugar, pre-packaged curd, lassi, butter milk, and dried fruits like raisins and tamarind. This schedule primarily covers basic necessities and agricultural products.
Schedule II – 18% Tax Rate Covers a wide range of goods, including artificial honey, vinegar, marble and granite (other than blocks), coal, and various chemicals. This schedule is aimed at standardizing tax rates for industrial and processed goods.
Schedule III – 40% Tax Rate Includes luxury items such as aerated beverages, caffeinated drinks, motor vehicles, motorcycles exceeding 350cc, yachts, aircraft for personal use, and revolvers. This high tax rate is intended to discourage consumption of luxury goods.
Schedule IV – 3% Tax Rate Focuses on precious metals and stones, including gold, silver, platinum, and articles of jewellery. This rate is designed to support the jewelry industry while maintaining revenue collection.
Schedule V – 0.25% Tax Rate Applies to rough diamonds and precious stones, ensuring minimal tax burden on raw materials for the diamond and gemstone industry.
Schedule VI – 1.50% Tax Rate Covers goods other than those specified in Schedule V, such as synthetic or reconstructed diamonds.
Schedule VII – 28% Tax Rate Includes items like pan masala, tobacco products, and manufactured tobacco substitutes. This rate is aimed at discouraging consumption of harmful products.

Notification No. 10/2025-Integrated Tax (Rate): Exemptions

This notification provides exemptions from IGST for specific inter-State supplies of goods. Key highlights include:

Exemption for live animals such as asses, mules, hinnies, bovine animals, swine, sheep, goats, and poultry.
Fresh milk, curd, lassi, paneer, and natural honey (other than pre-packaged and labeled) are exempted.
Agricultural products like fresh vegetables, fruits, seeds, and cereals are also exempted.
Human blood, contraceptives, and municipal waste are included in the exemption list.

These exemptions aim to reduce the tax burden on essential goods and promote affordability for consumers.

Notification No. 11/2025-Integrated Tax (Rate): Amendments 

This notification amends the earlier Notification No. 3/2017-Integrated Tax (Rate), revising the tax rate for certain goods to 18%. The amendment reflects the government’s effort to standardize tax rates and ensure consistency across categories.

Notification No. 12/2025-Integrated Tax (Rate): Further Amendments 

This notification modifies Notification No. 9/2018-Integrated Tax (Rate), replacing references to “Schedule IV” with “Schedule II or Schedule III” of Notification No. 9/2025. The change ensures alignment with the revised tax schedules and clarifies the applicable rates for specific goods.

Implications of the Notifications

Simplified Tax Structure The categorization of goods into seven schedules simplifies the tax structure, making it easier for businesses and consumers to understand applicable rates.
Encouragement of Essential Goods Lower tax rates and exemptions for essential goods promote affordability and accessibility, benefiting consumers and supporting industries like agriculture and healthcare.
Discouragement of Luxury and Harmful Products Higher tax rates on luxury items and harmful products like tobacco aim to discourage consumption and generate additional revenue.
Support for Specific Industries Minimal tax rates on raw materials like rough diamonds and precious stones support industries such as jewelry and gemstones, fostering growth and exports.

Conclusion

The revised IGST notifications reflect the government’s commitment to creating a balanced and equitable tax system. By categorizing goods into specific schedules and revising tax rates, the government aims to promote public interest, support essential industries, and discourage consumption of luxury and harmful products. Businesses and consumers must familiarize themselves with these changes to ensure compliance and take advantage of exemptions where applicable.

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Source: CBIC, Ministry of Finance. Govt. of India

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