What Gets Cheaper—or Costlier—for Consumers in New GST Rates 2025
Snapshot
Essentials become more affordable – milk, paneer, roti, soaps, hair oil, and life-saving medicines move to 0% or 5% GST.
Durables get cheaper – TVs, ACs, dishwashers, small cars, and two-wheelers now taxed at 18%—down from 28%.
Luxury items more expensive – high-end SUVs, aerated drinks, and tobacco are now taxed at 40%.
Inflation relief – expected to lower inflation by up to 1.1 percentage point, giving households more spending power.
What Consumers Stand to Gain
1. Everyday Saving: The Essentials Basket
Household staples are now far more affordable:
- Packaged foods like namkeen, biscuits, sauces, pasta, cornflakes, sugar confectionery drop from 12–18% to 5%.
- Dairy items like ghee, cheese, paneer, and rotis move to 5% or zero.
- Personal-care items including soaps, shampoo, toothpaste, hair oil, talcum powder, and combs are now at 5%, down from 18%.
- Life-saving medicines, spectacles, health insurance, and medical devices are either GST-free or taxed at 5%.
Impact: Immediate relief on household budgets, particularly benefiting middle-class and rural families.
2. Durables & Automobiles – Savings on Aspirational Goods
- TVs, ACs, dishwashers, refrigerators: GST reduced to 18% from 28%, cutting prices significantly.
- Small cars and two-wheelers are now taxed at 18%, not 28–31%, reducing prices by 6–12%. For example, popular hatchbacks may be ₹60,000–₹67,000 cheaper.
- SUVs and larger vehicles see tax reduced to 40% from 50%, lowering luxury tax burdens.
Impact: Makes aspirational purchases more accessible and stimulates durable goods consumption.
3. Travel, Hospitality, and Infrastructure
- Hotel rooms, especially those under ₹7,500 per night, now attract lower GST, making domestic travel more affordable.
- Cement—vital for housing and repairs—is now at 18%, down from 28%, easing home construction and repair costs.
Impact: Encourages tourism and housing growth by reducing costs.
4. Pro-Consumer Macro Effect: Inflation & Spending Power
- GST simplification (to 5%, 18%, and 40%) is expected to bring inflation down by about 1.1 percentage points.
- With lower taxes across essentials and durables, disposable income rises, giving families more breathing room.
Impact: Consumers can save more, spend on discretionary goods, and invest in long-term needs.
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Not everything gets cheaper under GST 2.0. Some items will become costlier:
- Luxury & sin goods: Items like pan masala, cigarettes, aerated drinks, yachts, and high-capacity motorcycles are now taxed at 40%.
- Apparel over ₹2,500 moves from 12% to 18%, leading to a price uptick in premium clothing.
- Coal has moved to 18%, increasing costs for industries and indirectly affecting consumers.
Summary Table: What’s Cheaper, More Expensive, or Neutral
| Category | Tax Change | Impact on Prices |
|---|---|---|
| Essentials & packaged foods | 12–18% → 5–0% | Significant savings |
| Personal care items & stationery | 18–12% → 5% or 0% | Cheaper daily items |
| Healthcare & insurance | 12–18% → 5% or 0% | Lower medical expenses |
| Appliances & electronics | 28% → 18% | Reduced durable costs |
| Small cars / two-wheelers | 28–31% → 18% | Noticeable vehicle savings |
| SUVs / larger vehicles | ~50% → 40% | Lower luxury tax |
| Hotel stays / cement | Various → 18% | Affordable services & repairs |
| Luxury/sin goods & over ₹2,500 apparel | Various → 18–40% | Increased cost |
| Coal | 5% → 18% | More expensive energy |
How This Benefits the Everyday Consumer
- Improved Affordability: Essentials like food, personal care, and healthcare now cost less—boosting living standards.
- Empowered Purchases: Tax cuts on durables and vehicles make big-ticket buys easier.
- Boost to Savings: Lower GST translates into real savings households can invest or spend elsewhere.
- Stimulated Demand & Jobs: Sectors like appliances and autos may see demand revival, supporting jobs and growth.
Final Takeaway
GST 2.0 is a consumer-first reform. It brings immediate relief on essentials and daily-use items, unlocks opportunities for aspirational purchases like vehicles and electronics, and lowers inflation—easing financial pressure for millions of Indian households.
While luxury items and sin goods will carry higher taxes, the overall benefit strongly supports the middle class and boosts consumer confidence just in time for festive spending.
FAQs on New GST Rates 2025
Q1. What are the New GST Rates 2025?
The New GST Rates 2025 are the revised tax slabs introduced under GST 2.0, which make essentials, personal care items, and small cars cheaper, while luxury goods and tobacco products get costlier.
Q2. Which items get cheaper under the New GST Rates 2025?
Daily essentials like soaps, shampoo, biscuits, ghee, medicines, and even small cars, two-wheelers, and home appliances like TVs and ACs have become cheaper under the New GST Rates 2025.
Q3. Which items get costlier under the New GST Rates 2025?
Luxury SUVs, cigarettes, aerated drinks, premium apparel above ₹2,500, and coal are among the items that have become more expensive under the New GST Rates 2025.
Q4. How do the New GST Rates 2025 benefit consumers?
The New GST Rates 2025 lower inflation, reduce the cost of essentials, and make big-ticket purchases like vehicles and electronics more affordable, directly benefiting middle-class families.
Q5. Will the New GST Rates 2025 impact inflation?
Yes, experts suggest the New GST Rates 2025 could lower inflation by around 1 percentage point, giving households more disposable income and improving purchasing power.
Q6. Do the New GST Rates 2025 affect services like hotels and insurance?
Yes, under the New GST Rates 2025, hotel stays below ₹7,500 attract lower tax, health insurance gets cheaper, and overall service affordability has improved.