2 July, 2025-The central government is reportedly preparing to slash Goods and Services Tax (GST) rates on several essential items used by the middle class, including toothpaste, utensils, readymade clothes, and footwear. Sources suggest that the move, aimed at easing household expenses and boosting consumption, may be officially announced in the upcoming GST Council meeting.
According to officials familiar with the development, the reduction in GST rates will lead to a revenue loss of approximately ₹40,000 crore to ₹50,000 crore annually. However, the government is ready to absorb the financial impact, viewing the relief as a necessary step to support the middle-income segment amid persistent inflationary pressures.
Currently, items like toothpaste and household utensils are taxed at 18% and 12%, respectively. These may be shifted to lower tax brackets, reducing retail prices significantly. Similarly, footwear and garments priced under ₹1,000—which are currently taxed at 12%—are likely to move to the 5% GST slab, offering further respite to consumers.
The decision is expected to benefit millions of households across the country by making daily-use goods more affordable. Officials believe that the relief will not only ease the cost of living but also stimulate demand in the domestic market, thereby supporting the overall economy.
Government sources indicate that the upcoming GST Council meeting will finalize the list of items and the extent of tax reduction. The move aligns with the Centre’s broader strategy of promoting consumption-led growth and strengthening the purchasing power of the middle class.
Economic analysts view the potential GST cuts as a timely intervention, especially at a time when household budgets are under strain due to rising prices of essentials. Many industry experts have also welcomed the move, stating that it could lead to an increase in demand across consumer goods and retail sectors.
Moreover, experts believe that the revised rates could improve tax compliance by discouraging under-invoicing and informal transactions, especially in segments like garments and footwear. A simplified and lower tax regime could encourage more businesses to operate within the formal economy.
If implemented, this will be one of the most significant GST relief measures introduced since the system’s rollout in 2017. The government’s willingness to take on the revenue loss signals a strong commitment to supporting consumers and reviving demand in the economy.
The final decision is expected after detailed deliberations in the GST Council meeting, which may be held later this month. Once approved, the new rates are likely to come into effect shortly thereafter.
