India’s revamped Goods and Services Tax regime, known as GST 2.0, came into force on Monday, bringing price cuts across a wide range of household goods, automobiles, and consumer electronics.
The new system has replaced the earlier four-slab structure with two standard rates — 5% for essential goods and 18% for most other items. A higher 40% slab has been introduced for luxury and sin goods such as tobacco, aerated drinks, and premium vehicles.
As a result, several daily-use items including ghee, butter, paneer, and packaged Indian breads have either moved to the lower 5% tax bracket or become tax-free. Processed foods such as jams, sauces, chocolates, and namkeen have also seen reductions from 12–18% GST to just 5%.
Large appliances and electronics, previously taxed at 28%, are now covered under the 18% slab. This is expected to make products such as televisions, air conditioners, washing machines, and dishwashers more affordable.
The automobile sector is also witnessing significant cuts. Major manufacturers including Maruti Suzuki, Tata Motors, and Hyundai have announced price reductions across popular models, with ex-showroom prices dropping by up to ₹1.3 lakh in certain cases. Small cars, which were earlier taxed at 28%, will now attract only 18% GST.
Healthcare and insurance have also received relief. Life and health insurance policies are now GST-exempt, while a number of lifesaving drugs and medical devices have been shifted to lower tax brackets.
While the government has promoted GST 2.0 as a “festival of savings,” economists have cautioned that the actual benefit to consumers will depend on how quickly retailers revise their Maximum Retail Prices (MRPs) to reflect the new tax rates.
The reform, described as one of the most significant tax rationalisations since GST was first implemented in 2017, is expected to stimulate consumer demand ahead of the festive season while maintaining higher levies on luxury and sin goods to safeguard revenue.
