From September 22, 2025, Indian consumers will witness a major relief in their daily expenses as the Goods and Services Tax (GST) Council has slashed tax rates on over 375 items. The move, which coincides with the beginning of Navaratri, is being celebrated by the government as a “GST Bachatutsav” (savings festival), promising reduced prices across essential goods, consumer durables, and automobiles.
Prime Minister Narendra Modi, in his address to the nation, termed the revised GST structure a double bonanza when combined with the income tax exemption hike to ₹12 lakh announced in the Union Budget. According to the Prime Minister, this combination will help households save nearly ₹2.5 lakh crore annually, easing the financial burden of the poor, neo-middle class, and middle-class families. The revised GST rates have been simplified into a two-tier structure of 5% and 18%, while ultra-luxury goods will attract a 40% tax. Tobacco and related products will continue to remain under the 28% plus cess bracket.
Everyday items that form part of the household basket are set to become cheaper. Products such as ghee, paneer, butter, namkeen, jam, ketchup, dry fruits, coffee, and ice creams will now attract only 5% GST. Daily-use consumer goods like toothpaste, toothbrushes, soaps, shampoos, and hair oils will also see a tax reduction from 12–18% to just 5%. Items like talcum powder, shaving cream, face powder, and after-shave lotions will now fall under the 5% tax bracket, significantly cutting costs for families. One of the most significant benefits of the GST rate cut will be in the healthcare sector. The tax on medicines, medical formulations, and diagnostic kits including glucometers has been reduced to 5%. This reduction will help bring down the cost of essential medicines, offering much-needed relief to households managing healthcare expenses.
The government has directed pharmacies and medical stores to revise their MRP or sell medicines at reduced prices, ensuring that the tax cut benefits are passed directly to the public. The automobile sector will be one of the biggest beneficiaries of the GST reforms. Tax rates have been brought down to 18% for small cars and 28% for bigger vehicles, leading to immediate price cuts. Several car manufacturers have already announced revised, lower price lists to attract buyers. Another major highlight of the GST cut is in the construction sector. The GST rate on cement has been reduced from 28% to 18%, which is expected to bring down construction costs for home builders and real estate developers, ultimately benefiting homebuyers. The service sector is also seeing significant relief. GST on beauty and wellness services including salons, spas, fitness centres, yoga services, and health clubs has been slashed from 18% (with input tax credit) to just 5% without ITC. This change is expected to make lifestyle and wellness services more affordable for consumers.
Finance Minister Nirmala Sitharaman has projected that the GST rate rationalization will inject ₹2 lakh crore into the economy, providing more disposable income to households and spurring overall consumption. Nearly 99% of goods under the previous 12% tax slab will now fall into the 5% category, while 90% of goods under the 28% slab will shift to the 18% bracket. This large-scale restructuring is expected to boost demand across industries while improving affordability for consumers, The reduction in GST rates marks a significant shift in India’s taxation landscape, one that directly impacts the daily lives of millions of citizens. By rationalising the tax structure into just two broad slabs and lowering the burden on essential goods, medicines, and services, the government has sought to make consumption more affordable while simplifying the system for businesses. For ordinary households, the relief will be felt in kitchen budgets, healthcare expenses, and even aspirational purchases like electronics and automobiles. For industries, particularly the automobile, real estate, and FMCG sectors, the rate cut is expected to stimulate demand, improve sales, and inject fresh momentum into the economy.
However, while the government projects an annual saving of ₹2.5 lakh crore for households and an infusion of ₹2 lakh crore into the economy, the real measure of success will be in how effectively these benefits reach the people. Price reductions announced by companies, revised MRPs at pharmacies, and lower costs of consumer durables must translate into genuine affordability at the ground level. The bold reforms also place responsibility on enforcement mechanisms to ensure that businesses do not pocket the difference but pass on the benefits to consumers. GST Rate Cut 2025 Kitchen Staples, Medicines, Electronics, and Automobiles to Get Cheaper from September 22 as India steps into what the Prime Minister has termed a “GST bachatutsav,” expectations are high that this restructuring will not only reduce the cost of living but also boost overall consumption and growth. If implemented smoothly, these reforms could mark a turning point in making GST not just a tax system but a tool for inclusive economic progress. Yet, the coming months will determine whether this festival of savings delivers lasting change for the poor, the middle class, and the economy at large—or remains another short-lived celebration of promises.