New GST rates now effective: Are fuel, liquor prices dropping?

**New GST Rates Now Effective: Are Fuel and Liquor Prices Dropping?**

*By Akash Pandey | September 22, 2025, 01:51 PM*

India’s indirect tax system is undergoing a significant overhaul starting today, September 22. Following the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman earlier this month, tax rates on goods and services have been substantially slashed. This reform impacts at least 375 items and aims to boost the economy amid ongoing tariff uncertainties.

### GST Rate Restructuring: What’s New?

The new GST framework simplifies the rate structure by consolidating the previous four slabs into just two: 5% and 18%. Most goods that were earlier taxed at 12% have now moved to the lower 5% bracket. Additionally, about 90% of items previously under the highest 28% tax slab have been reduced to the 18% rate.

### Economic Impact: ₹2 Lakh Crore Infusion

Finance Minister Sitharaman highlighted that these GST reforms will inject ₹2 lakh crore into the economy. This move is expected to increase disposable income, as consumers will keep more money that was earlier paid as taxes.

### What About Petrol and Diesel Prices?

It is important to note that petrol and diesel are **not** covered under GST. Their retail prices are influenced by central excise duties — which are uniform across states — and state-level Value Added Tax (VAT), which varies from state to state. This explains why fuel prices differ depending on location. Although the government has considered including petrol and diesel under GST, states have opposed this move to retain their taxation rights.

### Will Alcohol Prices Be Affected?

Similar to fuels, alcohol is outside the GST ambit. State governments have exclusive taxation powers over alcoholic beverages, primarily through VAT. Since states derive significant revenue from alcohol sales, they have kept it out of the GST system. Therefore, the recent GST rate changes will not directly impact liquor prices. That said, if any state decides to reduce its VAT rates on alcohol, consumers could see a price drop accordingly.

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In summary, while the new GST rates bring relief to many goods and services, petrol, diesel, and alcohol prices remain unaffected for now. Consumers can expect the benefits of lower taxes in various segments, but fuel and liquor prices will continue to be governed by separate state-level policies.
https://www.newsbytesapp.com/news/business/gst-2-0-now-effective-are-fuel-liquor-prices-going-down/story

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