GST 2.0 Reforms Bring Substantial Relief to Families and Consumers

New Delhi, September 22, 2025 – India’s goods and services tax regime has undergone radical changes with major reforms in Goods and Services Tax (GST). This new regime will bring substantial relief to families and drive consumer spending. The government has streamlined various tax slabs from four categories of 5, 12, 18, and 28 percent GST to a two-tier system of 5 percent and 18 percent GST for common commodities and services. Ultra-luxury items are taxed at 40 percent, and tobacco and tobacco products are still levied at 28 percent plus cess.

Impact on Household Expenditure

The reforms should reduce the cost of essentials and day-to-day needs. Vegetables, fruits, and cereals are becoming more affordable, as are grocery items, milk, and packaged food. Consumer durables such as televisions, refrigerators, and washing machines have also become less expensive. Top television brands such as Sony, LG, and Panasonic have reduced prices by up to ₹85,000. Automobiles have also become less expensive, with small car buyers saving over ₹1 lakh, while two-wheelers have also seen large price cuts. Individual health and life insurance policies, no longer taxable under GST, offer savings up to 18 percent.

Prime Minister Hails ‘GST Bachat Utsav’

Prime Minister Narendra Modi called the rollout a “GST Bachat Utsav,” highlighting that, coupled with the increased income tax exemption limit of ₹12 lakh in the Budget, families can enjoy a “double bonanza.” The government estimates that families can save a sum of ₹2.5 lakh crore annually. Reforms will augment disposable income, support domestic consumption, and provide a boost to the economy in the run-up to the festival season.

Benefits Across Sectors

Besides consumer goods, clothing, footwear, stationery, and medicines are more easily available at a discount of 7 to 12 percent. Healthcare items, such as essential medicines and diagnostic equipment, have also been preferred, along with baby care and educational products. Reforms are for the purpose of making goods and services more accessible, while also encouraging small and medium enterprises by simplifying compliance and reducing the tax burden.

Economic Projections and Market Consequences

The economists note that GST 2.0 can be a big boost to consumption-driven growth, particularly in the coming festive period. By simplifying tax compliance and reducing prices for an enormous array of commodities and services, the government aims to boost demand, temper inflationary pressures, and enhance India’s economic outlook.

A Milestone in India’s Tax Policy

The launch of next-generation GST reforms is a milestone moment for India’s taxation system, ushering in hard-fisted fiscal relief to consumers and marking a bigger push towards economic streamlining and growth inclusivity.

A Boost for the Poor and Middle Class

“Now, the poor, the neo-middle class, and the middle class are receiving a double bonanza. With the reduction in GST, it will be easier for them to fulfil their dreams,” said Modi in his address to the nation on Sunday.

The government expects the simplified GST structure and reduced rates to not only ease household expenses but also drive demand across key sectors like automobiles, consumer durables, and insurance.

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