GST rate cuts to take effect from Monday: Know what gets cheaper ?

PTC News Desk: Prime Minister Narendra Modi on Sunday said that prices of everyday goods will fall further with the implementation of the new Goods and Services Tax (GST) reforms, set to take effect on Monday, September 22. He described the move as a “GST bachat utsav” or festival of savings.

“Tax slabs of 5% and 18% only will be applied,” Modi said as he declared announced the roll out of “next generation GST reforms” from tomorrow.

Several FMCG companies have already announced price cuts in anticipation of the rationalised tax structure.

With GST on most medicines, medical devices such as glucometers, and diagnostic kits reduced to 5%, healthcare costs are expected to decline. Homebuilders too will gain, as GST on cement has been reduced from 28% to 18%. The government has instructed pharmacies to either revise the MRP or sell medicines at reduced rates to reflect these benefits.

The automobile sector is set to be among the biggest beneficiaries, with GST now fixed at 18% for small cars and 28% for larger vehicles. Many carmakers have already announced lower prices.

For services, GST on beauty, wellness, and fitness-related offerings—such as salons, spas, gyms, and yoga centres—has been reduced from 18% with input tax credit to 5% without tax credit.

Daily-use products including hair oil, soaps, shampoos, toothbrushes, and toothpaste will also become cheaper, with tax rates dropping to 5% from the earlier 12–18%. Items like talcum powder, shaving cream, and aftershave lotion will also see price reductions as their GST has been cut from 18% to 5%.

From September 22, GST will move to a simplified two-tier system, with most goods and services taxed at either 5% or 18%. Ultra-luxury items will attract a 40% rate, while tobacco and related products will remain in the 28% bracket plus cess.

Currently, GST is structured across four slabs—5%, 12%, 18%, and 28%—along with a compensation cess on luxury and sin goods.