In a landmark decision hailed as a direct gift to the common citizen, India’s GST framework has undergone a complete transformation. It’s not just a tax reform; it’s a strategic move to boost household spending, ignite economic growth, and, most importantly, put more money in your pocket.
The promise of “GST 2.0” stems from PM Modi’s vision for a simplified, citizen-centric tax regime, with the Centre finally dismantling the old 5%, 12%, 18%, and 28% slabs.
In their place, a streamlined, more logical system emerges: a “merit rate” of 5% for essentials and a standard 18% for most other goods and services, and a new 40% rate for luxury and “sin” goods. This one single act is expected to inject an estimated ₹2 lakh crore into the Indian economy, creating a ripple effect of affordability and prosperity.
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Prime Minister Narendra Modi, in his address ahead of the GST rollout, said the poor, neo-middle class, and middle class have received a “double bonanza” through recent tax reforms. He noted that making income up to ₹12 lakh tax-free in the Union Budget, along with new GST rates effective September 22, will together help citizens save over ₹2.5 lakh crore annually.Here’s a deep dive into how these changes will directly benefit you, from your kitchen to your commute.
1. The FMCG bonanza: Your daily life made cheaper
This is where the biggest savings will be felt, impacting every household’s monthly budget. From your morning routine to your evening snack, many of your go-to products are now much more affordable.
Personal care for less: Your bathroom cabinet is now a source of savings. From your trusted Patanjali toothpaste to shampoos from Dove and Himalaya, and soaps like Lux and Lifebuoy, these daily hygiene staples are now taxed at just 5%. Even shaving creams from Gillette and a range of popular makeup products have shifted to this lower slab.
Sweet and savoury treats: Snack time just got more affordable. The GST on Britannia biscuits, Cadbury chocolates, Amul ice creams, and even Lays chips has been reduced. This also includes Nestle’s Maggi noodles and a variety of sauces, jams and pickles.
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Kitchen staples get a tax break: The cost of cooking just went down. Packaged milk products like Amul butter, ghee, and cheese, along with dry fruits, are now taxed at 5%, down from 12%.
Tax-free necessities: A special Nil GST rate has been introduced for key items like pre-packaged paneer, Ultra-High Temperature (UHT) milk, and a wide variety of Indian breads (like rotis and parathas), bringing them on par with unpackaged products.
Examples:
- Amul Butter (₹250): saving ≈ ₹18 (if 12% → 5%).
- Lux Soap (₹120): saving ≈ ₹16 (if 18% → 5%).
- Britannia Biscuits (₹100): saving ≈ ₹7 (if 12% → 5%).
2. Mobility for masses: Your dream ride is now closer to reality
For millions of middle-class families, a new car or two-wheeler is a symbol of progress. The GST cuts on entry-level vehicles have made that dream a tangible reality, with prices dropping significantly across the board.
Cars that won’t break the bank: The steepest GST cuts are on small cars (with petrol engines up to 1200cc and diesel engines up to 1500cc), which now attract a flat 18% GST. This is a major markdown from the earlier 28% GST plus cess, and it translates to a significant price drop on models like the Maruti Suzuki Swift and Brezza.
Two-wheeler triumph: Scooters and motorcycles up to 350cc are now more affordable, bringing relief to millions of daily commuters. Expect a price reduction on best-selling models from brands like Hero MotoCorp and TVS.
A boost for the supply chain: The GST on commercial vehicles (trucks and delivery vans) has also been reduced from 28% to 18%. This will lower logistics costs for businesses, creating a positive domino effect that is expected to eventually bring down prices on a wide range of consumer goods.
Examples:
- Maruti Suzuki Swift (ex-showroom price ₹6.5 Lakhs): saving ≈ ₹65,000 (if 28% → 18%).
- TVS Jupiter (ex-showroom price ₹90,000): saving ≈ ₹9,000 (if 28% → 18%).
- Mahindra Tractor (₹6 Lakhs): saving ≈ ₹42,000 (if 12% → 5%).
3. Upgrading your home: Luxury appliances, affordable prices
The GST cuts on consumer durables are perfectly timed to fuel a surge in demand during the festive season. That big-screen TV or new washing machine you’ve been eyeing is now a smart, budget-friendly purchase.
Cooler homes, lower bills: Air conditioners and televisions (above 32 inches) have been moved to the 18% slab. In response, brands like LG, Voltas and Daikin have already started revising their prices, leading to significant savings.
Modernising your kitchen: Appliances that make life easier, like refrigerators, dishwashers and microwave ovens, are also now taxed at a lower rate, making them more attainable for middle-class families.
Eco-Friendly Savings: A reduction in GST on solar panels and solar water heaters to just 5% makes adopting green technology a financially smarter choice.
Examples:
- LG Air Conditioner (₹45,000): saving ≈ ₹4,500 (if 28% → 18%).
- Whirlpool Refrigerator (₹25,000): saving ≈ ₹2,500 (if 28% → 18%).
- Godrej Television (₹50,000): saving ≈ ₹5,000 (if 28% → 18%).
4. A firmer foundation: Building a better future for less
The construction sector is a key driver of employment and economic growth, and the GST reforms are set to give it a major boost. Lower taxes on crucial building materials will reduce overall construction costs, making home ownership more affordable for first-time buyers and promoting infrastructure development.
The cement cut: The GST on cement, a cornerstone of all construction, has been reduced. This cut is expected to lower construction costs for builders and could translate into significant savings on the cost of building a mid-sized home.
Cheaper materials for renovation: The GST on materials like marble, granite and sand-lime bricks has also been lowered to 5%, making it more affordable to build and/or renovate your home.
Examples:
- Cement (₹400/bag): saving ≈ ₹40 (if 28% → 18%).
- Marble Tiles (₹100/sq. ft): saving ≈ ₹7 (if 12% → 5%).
- Construction Bricks (₹6,000/1000 bricks): saving ≈ ₹420 (if 12% → 5%)
5. Health, wellness, and financial security
Perhaps the most significant and consumer-centric move is the focus on health and financial well-being. The GST Council’s decisions here are a direct investment in the health of the nation’s citizens.
Your health insurance premium is now tax-free: In a landmark move, all individual life and health insurance policies are now completely exempt from GST. This is a monumental relief for households, as it will lead to substantial annual savings on premiums and encourage more families to invest in vital financial protection.
Affordable healthcare: The GST on most medicines, medical devices and diagnostic kits has been reduced from 12% to 5%. A select list of life-saving drugs for critical illnesses is now completely tax-free.
Self-care on a budget: Services at salons, barbers, gyms and yoga centre are now taxed at a much lower 5%, encouraging a healthier and more active lifestyle without the financial strain.
Examples:
- Health Insurance Premium (₹30,000/year): saving ≈ ₹5,400 (if 18% → Nil).
- Medicines (₹500): saving ≈ ₹35 (if 12% → 5%).
- Gym Membership (₹2,500/month): saving ≈ ₹325 (if 18% → 5%).
6. Apparel and textiles
The reforms have also rationalised the tax structure for the textile industry. This not only supports rural livelihood but also ensures that the final apparel product is more affordable for the consumer.
Examples:
as a Reliable and Trusted News Source- Cotton shirt (₹800): saving ≈ ₹56 (if 12% → 5%).
- Saree (₹1,500): saving ≈ ₹105 (if 12% → 5%).
- Affordable footwear (₹900): saving ≈ ₹117 (if 18% → 5%).
Content Source: economictimes.indiatimes.com