GST Update: Which Essential Items Got Cheaper or Costlier?

Quick Summary

• The GST Council has approved rate reductions across several sectors, including food products, consumer electronics, agriculture, renewable energy, textiles, and health.
• GST rates are now consolidated into two main slabs: 5% and 18%, replacing the earlier four rates (5%, 12%, 18%, and 28%).
• Sin goods and luxury goods will attract a higher tax rate of 40%. Revenues from these categories aim too offset any shortfall for states.

Key Changes in GST Rates:

1. Food Products: Essential items like butter and cheese taxed at 5%; chapati, roti, paratha are now exempt from tax.
2. Medicines: Drugs for personal use reduced to a 5% tax slab; life-saving drugs (33 varieties) are fully exempted from GST (previously taxed at 12%).
3. apparel: Clothing items above ₹2,500 increased to an 18% GST rate; those priced below ₹2,500 remain taxed at 5%.
4. Luxury & Sin Goods: Yachts, caffeinated drinks like soft drinks and smoking-related products taxed at the higher slab of 40%.

Published: September 04, 2025.

Indian Opinion Analysis

The notable rationalization of GST rates reflects efforts by the government to simplify India’s indirect taxation system while addressing consumers’ affordability concerns in critical areas such as food staples and healthcare. Removing taxes on essential bread varieties symbolizes sensitivity toward daily household needs.

The redistribution also seeks fiscal balance by increasing taxes on non-essential luxury items under the new high-tax category of sin/luxury goods. While this may result in increased revenue for states needing compensation due to earlier shortfalls post-GST implementation phases over years long-term financial offsets-needed retention growthnestedforces