New GST Rates: What Items Will Get Cheaper in India [List] TAXCONCEPT

New GST Rates: What Items Will Get Cheaper in India [List]

Prime Minister Modi’s announcement to simplify India’s Goods and Services Tax (GST) from a four-tier to a two-rate system of 5% and 18% is poised to benefit consumers and stimulate demand. Essential goods and services may become cheaper, boosting household finances and boosting consumption-led growth while enhancing export competitiveness.

For India’s middle class, where even a slight change in tax rates can heavily impact household finances, Prime Minister Narendra Modi’s recent announcement brings welcome relief. The government is set to simplify the Goods and Services Tax (GST) structure, trimming the current four-tier system of 5%, 12%, 18%, and 28% into a leaner, two-rate framework of 5% and 18%. A separate “sin tax” category will continue to apply to products like tobacco and luxury goods.

For consumers, this change could mean real savings. Prices of everyday essentials and big-ticket items alike — textiles and apparel, farm machinery, auto components, healthcare, and insurance products, and even staples across the FMCG and retail sectors — are expected to soften. This isn’t just a tweak to tax rates; it’s a reset that could revive demand, lift household sentiment, and inject fresh energy into consumption-led growth.

Finance Minister Nirmala Sitharaman will address the crucial meeting of a group of ministers of states on Wednesday as she makes the case for the sweeping GST reforms. The idea is to put forth the Centre’s viewpoint behind the GST reform proposal. Although the Centre is not a member of the GoM, the presence of the Union Finance Minister and her address will give the GoM a better understanding of the idea and thought process behind the Centre’s proposal,” a source told PTI.

List of Key Items Likely to Get Cheaper Under New GST Regime:

Small Cars: From 28% to 18%
Insurance Premiums: From 18% to 5% or nil
Daily-use Items: (From 5% to nil)
Air Conditioners: (From 28% to 18%)
Televisions: (From 28% to 18%)

Items Likely to Be Moved to 5% GST Slab, as per ANI:

Tooth Powder
Bhujia
Namkeen
Potato Chips
Ketchup
Jam
Mayonnaise
Packaged Juices
Pasta
Noodles
Butter
Condensed Milk
Ghee
Cheese
Milk-based Beverages

A reduced GST is expected to trigger a multiplier effect by lowering logistics costs and easing compliance. Since many of the affected items are price-sensitive, cheaper prices from lower GST rates are likely to boost demand and generate jobs. Crucially, at a time when Trump’s tariffs are unsettling global trade, this move could enhance the competitiveness of India’s exports.