In a major tax reform, the GST Council has approved a big change by reducing the number of GST slabs to just two – 5% and 18%. This change will take effect from September 22, the first day of Navratri, and is expected to make hundreds of items more affordable for the general public.
The announcement was made by Finance Minister Nirmala Sitharaman, who highlighted that this step is aimed at giving relief to the middle class and boosting consumption during the festive season.
What Will Get Cheaper?
Sitharaman explained that many everyday goods will now be taxed at a lower rate:
- From 18% to 5%: Hair oil, toilet soap, shampoos, toothbrushes, toothpaste, tableware, kitchenware, bicycles, and other household essentials.
- From 5% to 0%: Milk (UHT), paneer, chena, and all types of Indian breads like roti, paratha, khakhra, and chapati.
- From 28% to 18%: Air conditioners, dishwashers, TVs (all sizes), small cars, motorcycles up to 350cc, buses, trucks, and ambulances.
- From 12% or 18% to 5%: Chocolates, namkeen, bhujiya, sauces, noodles, coffee, ghee, butter, cornflakes, preserved meat, and pasta.
- Life-saving medicines: GST on 33 essential drugs, including those for cancer and rare diseases, has been reduced to 0%. Spectacles and corrective lenses also get cheaper.
- Agricultural goods: Tractors, harvesting machines, and certain bio-pesticides reduced from 12% to 5%.
- Construction materials: Cement down from 28% to 18%. Marble, granite, leather goods, and handicrafts will also see lower rates.
- Insurance premiums: GST has been removed on all life and health insurance policies, including term life, ULIPs, family health plans, and senior citizen policies — making insurance more affordable for all.
What Will Cost More?
While most items are becoming cheaper, certain products have been classified as ‘sin goods’ and will now face higher taxes:
- Tobacco, cigarettes, pan masala, and aerated sugary drinks will be taxed at 40%.
- High-end luxury goods such as yachts, personal aircraft, and large motorcycles above 350cc also move to the 40% slab.
Why This Matters for Common People
Finance Minister Nirmala Sitharaman said the reforms were made “keeping the interests of the common man in mind.” With everyday goods, medicines, and insurance becoming cheaper, the move is expected to:
- Reduce household expenses: Middle-class families will feel relief on grocery, toiletries, and kitchen items.
- Boost healthcare access: Life-saving drugs and health insurance becoming cheaper will help more families get medical support.
- Support farmers: Lower GST on tractors, agri-machinery, and bio-pesticides will reduce costs in agriculture.
- Encourage consumption: Cheaper goods like cars, two-wheelers, ACs, and appliances are likely to increase sales, benefiting both consumers and businesses.
- Strengthen MSMEs and handicrafts: Lower rates on textiles, handicrafts, and renewable energy devices will support small industries and eco-friendly sectors.
How Life Will Change After GST 2.0
From September 22, people will see immediate benefits in their day-to-day spending. Monthly budgets will stretch further as groceries, toiletries, medicines, and kitchen goods get cheaper. Insurance will become more affordable, encouraging more people to buy health and life coverage. Farmers and small businesses will benefit from reduced input costs, making products cheaper in the long run.
This next-gen GST reform, led by Sitaraman, is being seen as a festival gift to the people that promises to ease the cost of living, boost demand, and give the economy fresh momentum.
