The GST Council’s September 2025 meeting brought a huge relief to households by providing a massive GST rate cut on essentials.
Several items that earlier attracted 12% GST have now been reduced to 5% or even made tax-free (0%). Similarly, goods previously taxed at 5% have shifted to 0%, directly lowering kitchen, healthcare, and education expenses.
With two broad slabs, 5% and 12%, seeing major corrections, the reforms are expected to ease inflationary pressures and bring meaningful savings to consumers.
Why the GST Rate Cut Matters
The Goods and Services Tax (GST), since its rollout in 2017, has streamlined indirect taxation. Yet, middle-class families often complained that essentials were being taxed at disproportionately high slabs. Rising inflation in 2024–25 made the issue even more pressing.
The Council’s latest decision under GST 2.0 reforms reflects a consumer-first approach: lowering tax on essentials to improve affordability, encourage compliance, and stimulate demand. By targeting widely consumed categories such as grains, cooking oils, medicines, sanitary products, and school supplies, the reform ensures relief reaches the common man.
Revised GST Rates on Daily Essentials
| Category | Earlier GST Rate | Revised GST Rate | Impact |
|---|---|---|---|
| Unbranded Food Grains (Rice, Wheat, Pulses) | 5% | 0% | Tax-free staples ease monthly grocery bills |
| Packaged Atta and Maida | 5% | 2% | Packaged foods become cheaper |
| Edible Oils | 12% | 5% | Cooking costs decline for households |
| Dairy Products (Paneer, Ghee, Butter) | 12% | 5% | Affordable access to protein-rich foods |
| Sanitary Napkins and Hygiene Products | 12% | 0% | Improves accessibility of women’s hygiene |
| Medicines for Common Ailments | 12% | 5% | Lower healthcare cost for chronic patients |
| LPG for Domestic Use | 5% | 0% | Direct relief on monthly utility expenses |
| School Supplies (Notebooks, Pencils, Crayons) | 12% | 5% | Education made more affordable |
| Public Transport Services | 18% | 12% | Cheaper daily commute |
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Impact of New GST Rates on Consumers
For households, the changes mean direct savings. A family buying LPG cylinders, edible oils, and dairy products each month could see noticeable reductions in their grocery and utility bills. The removal of tax on sanitary products also addresses long-standing affordability concerns in women’s health.
Education-related relief through lower GST on school supplies will help parents cut back-to-school costs, particularly for students in government and affordable private schools.
Also Read: Impact of New GST Reforms on Common People
Impact of New GST Rates on Businesses
Small traders, kirana stores, and local FMCG retailers stand to benefit from increased demand as prices come down. With lower tax compliance costs and better price competitiveness, Tier-2 and Tier-3 markets are expected to witness faster adoption.
For e-commerce and FMCG brands, the cuts will likely drive volumes in categories like packaged atta, dairy, and personal care, aligning with the government’s goal of boosting consumption-led growth.
Suggested Read: Bikes Become Cheaper After GST Rate Cut
Expert’s Views on Next-Gen GST Reforms
Industry experts have largely welcomed the move, though some caution that revenue shortfalls may challenge state finances. Economists believe, however, that higher demand from lower GST slabs can balance collections in the medium term.
Healthcare professionals and women’s rights advocates have particularly praised the removal of GST on sanitary products and reduction on medicines, marking the reform as both socially and economically impactful.
Conclusion
By cutting GST rates from 12% to 5%, 12% to 0%, and 5% to 0% across essentials, the government has prioritized consumer welfare without compromising on structural reforms. For Indian households, this means immediate relief on monthly budgets, for businesses it signals stronger demand, and for policymakers it shows a clear alignment toward inclusive growth.
As the festive season nears, the GST rate cut on essentials is poised to put more money in people’s hands, reviving consumption and confidence in the economy.
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