Image Source : Upstox
In a sweeping reform aimed at simplifying India’s indirect tax structure and easing consumer burden, the Goods and Services Tax (GST) Council’s revised rate framework will come into effect from September 22, 2025. Termed GST 2.0, the overhaul reduces the number of tax slabs and slashes rates on 375 goods and services, ranging from kitchen staples and medicines to electronics and automobiles.
The reform, announced earlier this month by Finance Minister Nirmala Sitharaman, is being positioned as a Diwali gift to the middle class and a structural reset for businesses. The new framework replaces the earlier four-tier system (5, 12, 18, and 28 percent) with a simplified two-slab model of 5 and 18 percent, plus a special 40 percent rate for ultra-luxury and sin goods.
Key Highlights From The GST Rate Cut Rollout
• Revised GST rates effective from September 22, 2025
• 375 goods and services to become cheaper across categories
• New slab structure: 5 percent and 18 percent, with 40 percent for select items
• 99 percent of items under the 12 percent slab moved to 5 percent
• 90 percent of items under the 28 percent slab shifted to 18 percent
• FMCG, auto, healthcare, and housing sectors among top beneficiaries
What Gets Cheaper: Sector-Wise Breakdown
1. Food And Daily Essentials
- Ghee, paneer, butter, namkeen, jam, ketchup, dry fruits, coffee, ice cream
- Packaged drinking water (20-litre bottles), biscuits, condensed milk, fruit pulp
- Toothpaste, toothbrushes, soaps, shampoos, hair oil, shaving cream, talcum powder
2. Electronics And Appliances
- Televisions, air conditioners, washing machines, dishwashers
- Price reductions expected between 7 to 10 percent due to lower GST and input cost pass-through
3. Healthcare And Medicines
- GST on most drugs and medical devices like glucometers and diagnostic kits reduced to 5 percent
- Pharmacies directed to revise MRP or offer discounts reflecting tax cuts
4. Automobiles
- Small cars now taxed at 18 percent, down from 28 percent
- Large cars and SUVs capped at 28 percent, replacing earlier 35 to 50 percent effective tax with cess
- Major auto brands have announced price drops effective September 22
5. Housing And Construction
- GST on cement reduced from 28 percent to 18 percent
- Expected to lower construction costs and make housing more affordable
6. Services
- Beauty and wellness services including salons, barbers, gyms, yoga studios now taxed at 5 percent without input tax credit
- Earlier rate was 18 percent with credit, making services more expensive for end consumers
Industry Response And Consumer Impact
Major FMCG brands including Amul, HUL, Himalaya, and L’Oréal have already announced price reductions across product lines. For example, Dove shampoo (340 ml) will now retail at Rs 435, down from Rs 490, while a four-pack of Lifebuoy soaps will cost Rs 60 instead of Rs 68. Horlicks and Kissan Jam have also seen price drops of Rs 20 and Rs 10 respectively.
Retailers have begun updating shelf prices and promotional materials, while manufacturers are revising MRPs on unsold stock as per government guidelines. The move is expected to inject Rs 2 lakh crore into the economy by leaving more disposable income in consumers’ hands.
Looking Ahead
The GST 2.0 rollout marks a significant shift in India’s tax policy, aiming to balance revenue generation with affordability and ease of compliance. As the festive season begins, the timing of the reform is expected to boost consumption, improve sentiment, and streamline business operations.
With 375 items becoming cheaper from tomorrow, the reform is not just a fiscal adjustment—it is a recalibration of India’s consumption economy.
Sources: MSN, The Hindu, News18, LiveMint, Economic Times.
Advertisement
Advertisement
