In a landmark move aimed at easing consumer expenses, the Goods and Services Tax (GST) Council has announced sweeping rate cuts that will come into effect from September 22. A total of 375 goods and services, including daily essentials, medicines, electronics, and automobiles, will become more affordable under the revised structure. The new framework reduces the earlier four-slab system into just two tiers — 5% and 18% — simplifying tax compliance and lowering costs across multiple sectors. However, luxury items and so-called “sin goods” will continue to attract a special 40% rate. Finance Minister Nirmala Sitharaman hailed the reform as a “Diwali gift” to the people, saying it would not only ease the burden on households but also streamline business operations.
Everyday items like butter, paneer, biscuits, ghee, cereals, juices, ice cream, and dry fruits will now be taxed at lower rates, benefitting millions of households. The move also covers personal care essentials such as shampoos, soaps, shaving cream, and face creams, making FMCG products more accessible. Electronics including washing machines, air conditioners, televisions, and dishwashers will also see a tax cut, while critical relief has been extended to the healthcare sector, with GST on several medicines and medical devices slashed to just 5%. Companies like Hindustan Unilever and Amul have already started passing on these benefits by cutting prices across a wide range of products, while the Indian Railways has also lowered the cost of Rail Neer bottled water.
The automobile and housing sectors are among the biggest winners in this reform. The GST on cement has been cut from 28% to 18%, potentially reducing home construction costs and making real estate more affordable for buyers. Meanwhile, small hatchbacks will now be taxed at 18% without compensation cess, resulting in significant price drops ranging from ₹70,000 to ₹1.3 lakh on popular models from Maruti Suzuki, Tata Motors, and Hyundai. The government has directed pharmaceutical companies and consumer brands to revise their maximum retail prices (MRPs) to ensure that the benefits of these cuts directly reach the public. With these sweeping changes, the GST overhaul is set to reshape consumer spending patterns and provide much-needed relief to the middle class, while boosting demand across key industries.
