GST Rate Cut Effective September 22: Goods and Services to Get Cheaper

Rapid Summary

• GST Rate Reduction: Effective from September 22, 2025, GST rates are reduced on approximately 375 items, benefitting consumers.
• Cheaper Goods and Services:

– Mass consumption goods like ghee, paneer, butter, ketchup, jams, dry fruits, and ice creams will see price cuts.
– aspirational goods such as TVs, ACs, washing machines now attract a lower tax rate.
– Everyday use products like hair oil, soap bars, shampoos have seen GST reduction to 5% (from 12/18%).
– Items like talcum powder and shaving cream also saw GST cut to 5%.

• Medical Benefits: GST on most drugs/formulations and medical devices (e.g., glucometers) reduced to 5%, making medicines cheaper. Pharmacies have been directed to revise prices accordingly.
• Real Estate & Construction: Cement’s GST rate is now slashed from 28% to 18%.
• Automotive Sector Gains: Automobiles now attract revised tax rates-18% for smaller cars and up to 28% for bigger models. Several manufacturers announced price reductions.
• Service Sectors Affected: Beauty/wellness services such as salons and yoga studios get reduced GST of 5%, though without Input Tax Credit benefits.
• New two-tier structure implemented with majority goods/services taxed at either five or eighteen percent; ultra-luxury remains at a high tax rate (40%).

Indian Opinion Analysis

The revised GST structure is likely aimed at reducing the cost-of-living burden on citizens while perhaps boosting economic activity during the festive Navaratri season starting September. By targeting high-consumption segments like food products and household essentials along with manufacturing sectors such as automobiles and real estate materials (cement), this policy could improve affordability across demographic groups.However tactically noteworthy is its economic meaning beyond consumer relief-the move sets the stage for greater cash availability in circulation by reducing government collection across non-luxury brackets something strategies political investing