India’s Goods and Services Tax (GST) 2.0 is set to roll out from 22 September 2025, marking the biggest overhaul since the tax was first introduced in 2017. The government has simplified the tax structure, reduced the number of slabs, and shifted focus toward easing the burden on common citizens while tightening taxes on luxury and “sin goods.”
This reform, unveiled just ahead of the festive season, is expected to bring immediate relief to households while also boosting consumption across key sectors like FMCG, electronics, healthcare, and apparel.
The government expects that this adjustment will significantly stimulate the economy by providing the average person more money to spend. A wide range of products and services, including groceries, fertilisers, footwear, textiles, and even renewable energy, will become more reasonably priced. Many goods that were previously taxed at 12% and 28% will now mostly move to the other two slabs, lowering the cost of a variety of goods.
- Now Zero GST: UHT milk, paneer, roti/paratha, and some staple foods.
- Down to 5%: Ghee, butter, cheese (earlier 12%). Packaged foods like biscuits, chocolates, noodles, sauces, sweets, dry fruits, and cornflakes (earlier 12–18%).
- Household basics such as hair oil, soaps, shampoos, toothpaste, utensils, bicycles, bamboo furniture, stationery items like notebooks, pencils, and erasers (earlier 12–18%).
- Nil GST on life-saving drugs – 33 essential medicines, including cancer and rare-disease drugs, now tax-free.
- Health & Life Insurance – Individual insurance policies exempt from 18% GST, making them cheaper and more accessible.
- Big relief for buyers: Air conditioners, refrigerators, washing machines, dishwashers, and large TVs will now attract 18% GST instead of 28%.
- Mobile phones & laptops remain unchanged at 18%.
- Small cars and two-wheelers are now taxed at 18% (down from 28%).
- Agricultural inputs – tractors, irrigation equipment, fertilizers, and bio-pesticides also at 18%.
- Cement and construction machinery get rate cuts too, helping the housing and infra sectors.
- Economy class tickets stay at 5%, unchanged.
- Premium economy, business, and first-class now taxed at 18%.
From 22 September 2025, GST 2.0 will directly impact your grocery bill, shopping budget, healthcare costs, and even festive purchases. Essentials will get cheaper, luxury and harmful products will get costlier, and India will move closer to a simplified, consumer-friendly tax system.
