The new GST 2.0 tax reform has officially come into force from September 22, 2025, coinciding with the first day of Navratri. With this change, prices of many essential items such as groceries, dairy products, medicines, and electronics have dropped, while taxes on luxury goods and harmful items have increased. Consumers can now expect household budgets to ease, while high-end buyers may face steeper costs.
Essential Food Items Become More Affordable
Under the revised GST structure, families will see a reduction in their daily kitchen expenses. Dairy products, edible oils, packaged flour, sugar, butter, chocolates, biscuits, and fruit juices now fall under the 5% tax slab instead of higher rates. Ready-to-eat items like roti and paratha have also been moved to a zero GST category. This major relief directly impacts grocery bills, offering more affordability for middle-class households.
Zero GST on Medicines and Educational Supplies
The government has granted zero GST on life-saving medicines, health insurance, and children’s education items. Essential drugs, including cancer medicines, previously taxed at 12%, are now GST-free. Similarly, school supplies such as pencils, erasers, notebooks, maps, and globes are exempt from GST. This decision significantly reduces costs for families, students, and patients while promoting access to healthcare and education without additional financial burden.
Household and Consumer Goods Under Lower Slab
Common household products like toothpaste, soap, shampoo, shaving products, and kitchenware have been shifted from 18% and 12% slabs to just 5%. Items such as diapers, candles, sewing needles, bamboo furniture, and baby products also fall under the reduced rate. This change provides relief to families managing everyday expenses, ensuring that consumer goods are more affordable across both urban and rural households.
Electronics and Appliances Witness Major Price Drop
Electronics that were previously taxed heavily have now become cheaper. Air conditioners, televisions, dishwashers, monitors, and projectors have moved from the 28% GST bracket to 18%. This reduction is expected to boost sales of household appliances, benefiting middle-class buyers. The reforms make technology and comfort products more accessible, reducing the gap between luxury and essential household electronics.
Relief for Farmers and Agricultural Sector
The agriculture sector has gained from GST cuts on tractors, tires, harvesting machines, sprinklers, pumps, and bio-pesticides. These items now fall under the 5% slab, compared to earlier rates of 12% to 28%. This major relief lowers the cost of farming equipment, directly supporting farmers and the rural economy. With reduced expenses on tools and inputs, the reforms aim to strengthen India’s agricultural productivity.
Healthcare Products Now Cheaper
Several essential medical products have also been placed in the reduced 5% slab. Thermometers, diagnostic kits, glucometers, surgical gloves, and oxygen supplies are now taxed less, making healthcare more affordable. Specialized medicines and medical-grade products, earlier taxed at 12% or 18%, have also seen cuts. This step is expected to improve accessibility and affordability of healthcare equipment for patients across the country.
Impact on Automobiles and Transport
In the auto sector, small cars, motorcycles under 350cc, ambulances, and commercial vehicles have moved from 28% to 18% GST, offering significant price cuts. Tractors, bicycles, and three-wheelers now attract only 5% GST. However, luxury vehicles, large SUVs, and motorcycles above 350cc face an increased GST rate of 40%, making premium vehicles significantly more expensive for high-end buyers.
Textile and Handicraft Sector Benefits
The textile industry has also seen price relief with synthetic yarn, fabrics, sewing threads, and readymade garments under ₹2,500 now falling into the 5% GST slab. Handmade paper, handicrafts, leather goods, and bamboo furniture also benefit from reduced rates. These reforms aim to support artisans, small businesses, and the handicraft sector by lowering production costs and boosting demand in domestic and export markets.
Luxury Goods and Sin Products Get Costlier
While most daily essentials have become cheaper, luxury and harmful goods now face higher GST. Premium cars, hybrid vehicles, racing bikes, casinos, gambling, and betting have been taxed at 40%. Cigarettes, cigars, tobacco, and carbonated drinks also face higher rates. The government’s aim is to discourage consumption of harmful products while ensuring that mass-market essentials remain affordable for ordinary households.
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