As GST rate cuts take effect from September 22, 2025, many everyday items across India will become cheaper, bringing relief to consumers nationwide. The government has simplified GST slabs by reducing four tax brackets to two main rates of 5% and 18%, effective this Monday. This change is expected to ease the tax burden on essential goods, automobiles, and personal care products.
Simplified GST: What Has Changed?
Earlier, GST was charged at four rates—5%, 12%, 18%, and 28%—with some luxury and sin goods taxed even higher. From now, the GST Council has streamlined this to mainly 5% and 18%, while ultra-luxury items remain at 40%, and tobacco products stay in the 28% plus cess category. This reform affects hundreds of products, making them more affordable for middle-class families and boosting consumption.
Medicines and Medical Devices Cheaper
One of the biggest beneficiaries is the healthcare sector. GST on medicines, previously at 12%, is now reduced to 5%. Moreover, 36 critical life-saving drugs, including treatments for cancer and rare diseases, are fully exempted from GST. Medical devices like diagnostic kits also carry a lower tax of 5%. These cuts will reduce costs for patients and improve access to essential healthcare.
Everyday Items and Household Goods
Basic kitchen staples such as ghee, butter, paneer, dry fruits, ketchup, and coffee will now come at a lower price due to the GST cut to 5%. Personal care products, including hair oil, soaps, shampoos, toothpaste, talcum powder, and shaving creams, will also become more affordable. Even items like ice creams and popular household appliances such as TVs, air conditioners, and washing machines have seen their tax rates lowered, encouraging higher consumption.
Automobile Prices Decline
Car buyers will notice significant price drops. GST on small cars is now 18%, down from 28%, while bigger cars attract 28%. Several automobile makers, including Maruti Suzuki, have announced price reductions accordingly. This cut helps increase affordability for buyers and is expected to positively impact car sales across the country.
Benefit for Service Sector and Wellness
Services like health clubs, salons, barbershops, fitness centers, and yoga classes will see GST fall from 18% with input tax credit to 5% without ITC. This move will reduce service costs and encourage more people to invest in personal wellness.
What to Expect for Consumers?
With this GST reform, approximately ₹2 lakh crore is expected to return to the hands of consumers. Lower tax rates help increase buying power, especially for the middle class and micro, small, and medium enterprises (MSMEs). The government aims to simplify taxation and boost economic growth by making essential goods and services more affordable for all Indians.
