GST 2.0: What will get cheaper from September 22 - See full list

 

GST 2.0: What Will Get Cheaper from September 22 - Full List

On September 3, 2025, the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, approved a landmark overhaul of India’s Goods and Services Tax (GST) structure, dubbed GST 2.0. Effective from September 22, 2025, coinciding with the start of Navratri, this reform simplifies the tax regime by reducing the existing four slabs (5%, 12%, 18%, and 28%) to a two-tier structure of 5% and 18%, with a special 40% slab for luxury and sin goods. The move aims to boost domestic consumption, ease the tax burden on the common man, and cushion the economic impact of global trade challenges, such as US tariffs on Indian goods. This blog explores the items and services that will become cheaper under GST 2.0, providing a comprehensive list to help you understand how it impacts your wallet.

Why GST 2.0 Matters

Announced by Prime Minister Narendra Modi during his Independence Day address in 2025, GST 2.0 is designed to simplify compliance, reduce costs for daily essentials, and encourage spending during India’s festive season. By slashing taxes on a wide range of goods and services, the government hopes to put more money in the hands of consumers, particularly the middle class and lower-income groups. The reforms are expected to have a revenue impact of ₹48,000 crore but are deemed fiscally sustainable due to buoyant tax collections. However, the success of these changes depends on whether businesses pass on the benefits to consumers, a challenge noted in the absence of the Anti-Profiteering Authority.

What Will Get Cheaper from September 22

The GST 2.0 reforms focus on reducing taxes on daily essentials, healthcare, agriculture, automobiles, and more. Below is a detailed, sector-wise list of items and services that will see price reductions starting September 22, 2025, based on the GST Council’s announcements.

1. Food and Dairy Products

Many kitchen staples and packaged foods will become more affordable, easing monthly household budgets:

• Nil GST (Previously 5%):
  • Ultra-High Temperature (UHT) milk
  • Paneer (chena, non-pre-packaged and labeled)
  • All types of Indian breads (chapati, paratha, roti, khakra, pizza bread)
• 5% GST (Reduced from 12% or 18%):
  • Butter, ghee, cheese, and dairy spreads
  • Condensed milk
  • Dry fruits, sugar-boiled confectionery, jams, fruit jellies
  • Tender coconut water
  • Namkeens, bhujia, and ready-to-eat savory snacks
  • Drinking water in 20-liter bottles
  • Fruit pulp, fruit juice, and milk-based beverages
  • Ice cream, pastries, biscuits, corn flakes, cereals
  • Sausages, meat, and fish preparations
  • Pasta, starches, chocolates, and cocoa products
  • Vegetable oils, edible spreads, and foods made with malt extract
  • Plant-based and soya milk drinks

2. Personal Care and Household Goods

Daily-use products and toiletries will see significant tax cuts, making personal care more affordable:

• 5% GST (Reduced from 12% or 18%):
  • Hair oil, shampoo, toothpaste, toothbrushes
  • Toilet soap bars (liquid soaps remain at 18%)
  • Talcum powder, face powder, shaving cream, aftershave lotion
  • Feeding bottles, napkins for babies, clinical diapers
  • Tableware, kitchenware, utensils, combs
  • Umbrellas, bicycles, bamboo furniture

3. Healthcare and Medicines

Healthcare costs will decrease significantly, with exemptions and reductions for critical medical items and services:

• Nil GST (Previously 12% or 18%):
  • Individual life and health insurance policies (including family floater and senior citizen plans)
  • 33 lifesaving drugs, including medicines for cancer and rare diseases
• 5% GST (Reduced from 12% or 18%):
  • All other drugs and medicines
  • Medical-grade oxygen, diagnostic kits, reagents, glucometers, test strips
  • Corrective spectacles, thermometers
  • Medical devices, instruments, and apparatus for medical, surgical, dental, or veterinary use
  • Wadding gauze, bandages, blood glucose monitoring systems

4. Automobiles and Mobility

Small vehicles and their components will become more affordable, benefiting middle-class consumers and the auto industry:

• 18% GST (Reduced from 28%):
  • Small cars (petrol ≤1200cc, diesel ≤1500cc, length ≤4000mm), including models like Maruti Swift, WagonR, Hyundai i20, Tata Altroz, Renault Kwid, Hyundai Exter
  • Motorcycles up to 350cc
  • Small hybrid cars
  • Goods transport vehicles, three-wheelers, ambulances
  • Auto components (previously a mix of 18% and 28%)
• 5% GST (Unchanged):
  • Electric vehicles (EVs) to support clean mobility

5. Agriculture and Renewable Energy

Farmers and eco-conscious consumers will benefit from lower taxes on agricultural inputs and green energy products:

• 5% GST (Reduced from 12% or 18%):
  • Tractors, tractor tires, and parts
  • Specified bio-pesticides, micro-nutrients
  • Drip irrigation systems, sprinklers
  • Agricultural, horticultural, or forestry machines for soil preparation, cultivation, harvesting, and threshing
  • Fertilizers (e.g., sulphuric acid, nitric acid, ammonia)
  • Renewable energy devices and components for their manufacture

6. Consumer Electronics and Appliances

Mass-use electronics and appliances will see tax reductions, making them more accessible:

• 18% GST (Reduced from 28%):
  • Air conditioners, dishwashers, TVs (above 32 inches), monitors, projectors
  • Other white goods

7. Education and Stationery

Education-related items will become more affordable, supporting students and schools:

• Nil GST (Previously 5% or 12%):
  • Maps, charts, globes
  • Pencils, sharpeners, crayons, pastels, exercise books, notebooks
  • Erasers
• 5% GST (Reduced from 12%):
  • Educational services and learning aids

8. Textiles and Footwear

Mass-market clothing and footwear will see reduced costs, benefiting labor-intensive sectors:

• 5% GST (Reduced from 12%):
  • Footwear
  • Textiles, including man-made fiber and yarn
  • Handicrafts, marble, granite blocks, intermediate leather goods
  • Natural menthol

9. Services

Several services will become cheaper, particularly those related to personal care and transportation:

• 5% GST (Reduced from 12% or 18%):
  • Beauty and personal care services (gyms, salons, barber shops, yoga centers)
  • Hotel accommodation below ₹7,500
  • Goods transport by GTA/CTO (without input tax credit)
  • Job work for pharmaceuticals and leather
  • Economy class air tickets
  • Passenger transport (without input tax credit)

10. Construction and Building Materials

Home renovation and construction costs will decrease, supporting the real estate sector:

• 18% GST (Reduced from 28%):
  • Cement
• 5% GST (Reduced from 12%):
  • Marble, granite, travertine blocks

11. Other Sectors

• 5% GST (Reduced from 12%):
  • Sports goods and toys
  • Leather and wood products
  • Paper products (certain grades now nil)
• Nil GST:
  • Technical documentation, select military, aircraft, and ship parts
  • Diamonds, antiques

What Stays Expensive or Gets Costlier

While GST 2.0 focuses on affordability, certain luxury and sin goods will face a new 40% tax slab to discourage consumption and generate revenue:

• 40% GST (Increased from 28%):
  • Pan masala, gutkha, cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and bidis (to shift to 40% after compensation cess loans are cleared)
  • Aerated drinks with added sugar, carbonated and caffeinated beverages, fruit-based non-alcoholic drinks
  • Motorcycles above 350cc (e.g., Royal Enfield Himalayan 450, KTM Duke 390)
  • Mid-size and large cars (petrol >1200cc, diesel >1500cc, length >4000mm), including SUVs like Hyundai Creta, Kia Seltos, Tata Harrier, Mahindra XUV700
  • Yachts, personal aircraft, racing cars
  • Services like casinos, gambling, lotteries, horse racing, online money gaming, and IPL tickets

Impact on Consumers and Businesses

For consumers, GST 2.0 means lower costs for daily essentials, healthcare, and small vehicles, potentially saving households thousands of rupees annually. For example, a family paying ₹25,000 in health insurance premiums could save ₹4,500 due to the nil GST rate. Businesses, especially MSMEs, will benefit from simpler compliance and pre-filled GST returns, encouraging formalization. However, the shift to a 40% slab for luxury and sin goods may increase prices for premium products, though demand for such items is often inelastic.

Challenges and Considerations

While the reforms are a “Diwali gift” for consumers, as described by the government, ensuring that businesses pass on these tax reductions to customers remains a concern. Economists and state finance ministers, particularly from opposition-ruled states like West Bengal and Kerala, have highlighted potential revenue losses of ₹477 billion, urging robust compensation mechanisms. The valuation of tobacco products shifting to Retail Sale Price (RSP) may also increase their final prices, impacting consumers of these goods.

Conclusion

GST 2.0, effective from September 22, 2025, marks a significant step toward simplifying India’s tax structure and making essentials more affordable. From tax-free paneer and health insurance to cheaper small cars and shampoo, the reforms aim to benefit the common man, farmers, and small businesses. As the festive season approaches, these changes could boost spending and support economic growth. Keep an eye on price tags and insurance premiums to ensure you’re reaping the benefits of these historic tax cuts.

Sources: NDTV, India Today, The Financial Express, Hindustan Times, The Economic Times, Moneycontrol, The Hindu, Business Today, Republic World, Outlook Money, The Times of India