GST 2.0 gets the green light: What gets cheaper and costlier from September 22?

The 56th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman in New Delhi on September 3, has paved the way for a sweeping overhaul of India’s indirect tax structure.

The changes, set to roll out from September 22, will directly impact household budgets, with a wide range of daily-use goods becoming cheaper while a few categories remain under tighter taxation.

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GST 2.0 What gets cheaper

The Council has approved major cuts across multiple sectors, directly benefiting households and businesses:

Food and daily essentials

• Milk products: UHT milk will now be tax-free (down from 5%), while condensed milk, butter, ghee, paneer, and cheese have moved from 12% to 5% or nil in some cases.
  
• Staple foods: Malt, starches, pasta, cornflakes, biscuits, and even chocolates and cocoa products will see rates reduced from 12–18% to 5%.
  
• Dry fruits and nuts: Almonds, pistachios, hazelnuts, cashews, and dates, earlier taxed at 12%, will now attract just 5%.
  
• Sugar and confectionery: Refined sugar, sugar syrups, and confectionery items like toffees and candy have shifted to the 5% bracket.
  
• Other packaged foods: Vegetable oils, animal fats, edible spreads, sausages, meat preparations, fish products, and malt extract-based packaged foods have been moved to the 5% slab.
• Namkeens, bhujia, mixture, chabena and similar edible preparations ready for consumption form (other than roasted gram), pre-packaged and labelled to go from 18% to 5%.
• Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured to move from 18% to 5%.
  
  

Agriculture & Fertilisers

• Fertilisers (down from 12%/18% to 5%).
  
• Select agricultural inputs, including seeds and crop nutrients, rationalised from 12% to 5%.
  
  

Healthcare & Education

• Life-saving drugs, health-related products, and some medical devices have seen rate cuts (down from 12%/18% to 5% or nil).
  
• Educational services and items such as books and learning aids: GST reduced from 5%–12% to nil or 5%.
  
  

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Consumer goods

• Electronics: Entry-level and mass-use items like select appliances will move from 28% to 18%.
  
• Footwear and textiles: GST cut from 12% to 5%, reducing costs for mass-market products.
  
• Paper sector: Certain grades brought down from 12% to nil.
• Hair oil, shampoo, Dental floss, toothpaste to go from 18% to 5%

Auto sector

• GST on small cars reduced to 18% from 28%
• GST on motorcycles of 350cc and below reduced to 18% from 28%
• GST on large cars, motorcycles at 40%, no additional cess
• GST on all car parts to be 18%
• GST on EVs to be maintained at 5%

Other sectors

• Renewable energy devices: Reduced from 12% to 5%.
  
• Construction inputs: Key raw materials reduced from 12% to 5%.
  
• Sports goods and toys: Down from 12% to 5%.
  
• Leather, wood, and handicrafts: Brought into the 5% bracket.
  
  

In essence, from groceries and fertilisers to footwear, textiles, and even renewable energy, a broad basket of goods and services is set to become more affordable, providing relief to the common household, small businesses, and the aspirational middle class.

GST 2.0 What gets Costlier

Despite the broad-based relief, certain goods and services remain firmly under higher taxation:

Sin goods

• Pan masala, gutkha, cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and bidi will continue under existing high GST rates and compensation cess until outstanding cess-linked loans are cleared.
• Additionally, valuation of these products will now be shifted to Retail Sale Price (RSP) instead of transaction value, tightening compliance.
• .All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured to go from 28% to 40%

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Luxury and premium items

• A new 40% slab for sin and luxury goods remains, ensuring that items like cigarettes, premium liquor, and high-end cars don’t see tax relief.
• Imported armoured luxury sedans will be exempt only in special cases, such as those brought in by the President’s Secretariat.

Energy & fuels

• Coal, which previously attracted 5%, will now be taxed at 18%, raising costs for coal-based industries.

Services

• Restaurants operating within “specified premises” can no longer declare themselves eligible for the 18% with ITC option, closing a potential loophole.
• Certain lottery and intermediary services face redefined valuation rules, keeping their tax burden intact or higher.