GST Council cuts tax rates, several items become cheaper
GST Council limits slabs to 5% and 18%, effective September 22 Navaratri.
GST Council Slashes Tax Slabs: From Food to Electronics, What Gets CheaperNew Delhi: Everyday essentials and popular consumer goods are set to become cheaper after the Goods and Services Tax (GST) Council approved sweeping reforms to India’s indirect tax structure. From September 22—coinciding with the first day of Navaratri—GST will be simplified into just two key slabs, and several common-use items will now attract significantly lower or even nil tax.
The Council’s decision marks one of the most dramatic overhauls of the GST regime since it was rolled out in 2017. Items ranging from roti and paratha to soaps, shampoos, hair oil, and even motorcycles and televisions will see rate cuts. In addition, personal health and life insurance premiums will now be fully exempt from GST, bringing financial relief to millions of households.
# Two Slabs Instead of Four
Union Finance Minister Nirmala Sitharaman, briefing reporters after a marathon day-long GST Council meeting, announced that the current four-slab structure of 5, 12, 18, and 28 per cent will be reduced to just two main slabs: 5 per cent and 18 per cent.
A special 40 per cent slab will remain for a small set of luxury or sin goods such as high-end cars, cigarettes, and tobacco products. “This simplification was long overdue and has been approved unanimously by all states,” Sitharaman said, stressing the rare consensus achieved in the meeting.
# Food and Household Items: Big Relief for Consumers
The biggest relief comes on essential food items and household products. Paratha, which previously attracted an 18 per cent tax, will now be completely exempt.
Common-use foods such as butter, ghee, dry fruits, cheese, condensed milk, figs, avocados, sausages, meat, confectionery, jam, jellies, fruit juice, namkeen, and ice cream will now be taxed at 5 per cent, down from the earlier 12 or 18 per cent. Even everyday items like biscuits, pastries, cornflakes, and cereals will become more affordable.
Packaged drinking water in 20-litre bottles, tender coconut water, and milk-based beverages are also part of the reduced-tax list. Educational supplies such as erasers, maps, pencil sharpeners, and exercise books will now be tax-free, down from 5 per cent.
# Consumer Goods: From Toiletries to Furniture
Toiletries and personal care items, which typically burn a hole in household budgets, have also seen sharp cuts.
# Insurance and Services: Boost for Coverage
The move is expected to reduce premium costs substantially and encourage more families to opt for coverage.
Services like third-party insurance for goods carriage will now attract only 5 per cent GST, down from 12 per cent.
# Electronics and Automobiles
Consumer electronics and vehicles also feature prominently in the reforms. Motorcycles with engine capacity up to 350 cc, along with televisions, dishwashers, and air conditioners, will now be taxed at 18 per cent, down from 28 per cent.
At the same time, luxury vehicles—cars above 1,200 cc, motorcycles above 350 cc, yachts, private aircraft, and racing cars—will face the highest slab of 40 per cent. Sugary aerated drinks will also be taxed at this rate.
Electric vehicles (EVs), however, will continue to attract a 5 per cent GST, reaffirming the government’s support for green mobility.
# Economic Rationale and Impact
Economists believe the reforms could boost India’s GDP growth by up to 0.5 percentage points within two years, helping cushion the impact of steep US tariffs on Indian exports. With private consumption accounting for over 61 per cent of GDP, cheaper goods are expected to encourage household spending.
Prime Minister Narendra Modi had first hinted at such reforms during his Independence Day speech, and the Council’s approval now paves the way for implementation.
# What Stays Expensive
Despite the sweeping cuts, some goods remain under higher taxation. Tobacco products including gutkha, cigarettes, and chewing tobacco will continue under the 28 per cent slab plus compensation cess until states’ revenue-loss loans are cleared. Services like gambling, casinos, horse racing, and online betting will also attract a steep 40 per cent levy.
# A Festival Season Push
The festival season traditionally sees a surge in consumption, and cheaper essentials, electronics, and vehicles are expected to provide a further boost to demand.
“The simplification of GST is not just about rates—it’s about trust and cooperation between the Centre and states,” Sitharaman said. “It is about making life easier for citizens and boosting India’s growth.”
As the festive season begins, shoppers can look forward to lower bills at supermarkets, showrooms, and insurance counters—making this Navaratri one to remember.