In a sweeping reform dubbed GST 2.0, the Indian government has slashed tax rates on over 375 goods and services, effective today. The move, announced by Finance Minister Nirmala Sitharaman and hailed by Prime Minister Narendra Modi as a “GST Bachat Utsav,” aims to simplify taxation and boost consumer savings as the festive season begins.
New Tax Structure
The previous four-tier GST system (5%, 12%, 18%, 28%) has been streamlined into just two slabs: 5% and 18%, with 0% GST on essential items and 40% GST reserved for luxury and sin goods.
Items Now Taxed at 0% (NIL GST)
- Essential Foods: Roti, paneer, khakhra, pizza bread, UHT milk
- Stationery: Notebooks, graph books, pencils, chalk, maps, globes
- Life-Saving Medicines: Over 30 drugs for cancer, rare diseases, and chronic conditions
- Diagnostic Kits & Devices: Thermometers, glucometers, corrective goggles
Items Moved to 5% GST
- Personal Care: Soaps, shampoos, toothpaste, razors, shaving cream
- Packaged Foods: Namkeen, bhujia, ketchup, jam, chocolates
- Dairy Products: Butter, ghee, paneer, cheese
- School Supplies: Erasers, sharpeners, crayons, drawing chalk
- Traditional Medicines: Ayurveda and Unani formulations
- Packaged Water: Rail Neer bottles now ₹1 cheaper
Big-Ticket Items Now at 18% GST
- Automobiles: Small cars, two-wheelers up to 350cc, auto parts
- Appliances: Air conditioners, TVs above 32 inches, dishwashers
- Fitness & Wellness: Salons, yoga classes, gyms (without ITC)
- Insurance Premiums: Life and health insurance policies
Impact on Consumers
- Monthly Savings: Lower prices on essentials will ease household budgets
- Festive Boost: FMCG and auto sectors expect a surge in demand
- Business Relief: Small traders and manufacturers benefit from simplified compliance
Major brands like Amul and Mother Dairy have already announced price cuts across hundreds of products to pass on the benefits.