Big news for your budget! Starting Monday, September 22, 2025, consumers across India can expect prices to drop significantly on a wide array of goods and services. From everyday kitchen essentials to high-tech electronics, critical medicines, and even new automobiles, these savings are a direct result of the recent Goods and Services Tax (GST) rate reductions.
This consumer-friendly decision was made by the GST Council, a joint body of the Central and State governments. The timing couldn’t be better, with the new rates rolling out just in time for the festive Navaratri season.
Imagine your grocery list getting lighter on your wallet: items like ghee, paneer, butter, ‘namkeen’, ketchup, jam, dry fruits, coffee, and ice creams are all slated to become cheaper. Beyond the kitchen, aspirational purchases like TVs, air conditioners, and washing machines will also see price reductions, making them more accessible.
What’s Getting Cheaper? A Quick Rundown
The GST reduction on most drugs, medical formulations, and devices like glucometers and diagnostic kits to just 5% means a significant drop in healthcare costs for the average person. For those looking to build or renovate, the GST on cement has been trimmed from 28% to 18%, offering a welcome relief to home builders. The government has already instructed pharmacies to adjust their Maximum Retail Prices (MRPs) to reflect these tax benefits, ensuring consumers feel the impact immediately.
Automobile enthusiasts have reason to celebrate too, with tax rates on cars slashed to 18% for small vehicles and 28% for larger ones. Several car manufacturers have already announced their updated, lower price lists.
When it comes to services, you’ll also find some relief. GST on beauty and physical well-being services, including health clubs, salons, barbers, fitness centers, and yoga classes, has been significantly cut from 18% (with Input Tax Credit) to 5% (without tax credit).
And it’s not just big-ticket items! Many daily use personal care products like hair oil, toilet soap bars, shampoos, toothbrushes, and toothpaste are also expected to become cheaper, with their tax rates falling from 12-18% to a uniform 5%.
Other everyday essentials such as talcum powder, face powder, shaving cream, and after-shave lotion will similarly see price reductions as their GST rates drop from 18% to 5%.
From September 22, the GST system will largely adopt a two-tier structure, with most goods and services attracting either a 5% or 18% tax. Ultra-luxury items will still face a 40% tax, while tobacco and related products will remain in the 28% plus cess category.
Currently, GST operates under four primary slabs: 5%, 12%, 18%, and 28%, along with a compensation cess on certain luxury and demerit goods.
Explained | Will the GST rate cuts boost the economy?
Finance Minister Nirmala Sitharaman highlighted last week that these GST reforms are anticipated to inject an impressive ₹2 lakh crore into the economy. This infusion means more disposable income for citizens, as money that would otherwise have gone towards taxes now remains in their hands.
A significant aspect of this restructuring is that approximately 99% of goods currently under the 12% GST slab will transition to the lower 5% bracket. Furthermore, a substantial 90% of items presently taxed at 28% will now fall into the 18% category, broadening the scope of affordability for countless products.