
The new GST has slashed rates on hundreds of items that fill Indian kitchens, classrooms, and bathrooms. Hair oil, shampoo, butter, ghee, biscuits, chocolates, ice cream, home appliances, even personal health and life insurance: most move to the 5% slab. Electronic goods like TVs, air conditioners, fridges, and small cars drop from 28% to just 18%. Cement, household kitchenware, stationery (including pencils, notebooks, and charts), footwear, and nearly all packaged food now sit at 5%.
What Gets Cheaper: Sector-Wise Gains
The reform promises to make essentials more affordable and streamline sectoral tax compliance. Here’s a breakdown of key sectors and the changes that matter most:
| Item | Old GST | New GST |
|---|---|---|
| Ultra-high-temperature milk | 5% | Nil |
| Butter, ghee, cheese | 12-18% | 5% |
| Packaged biscuits, cakes, ice cream | 18% | 5% |
| Chocolates, confectionery | 18% | 5% |
| Soft drinks, sodas | 28% | 40% |
Healthcare Relief for All
Life-saving drugs, diagnostic kits, and medical devices see major GST cuts, making healthcare more accessible.
| Item | Old GST | New GST |
|---|---|---|
| Life-saving drugs, vaccines, diagnostics | 12-18% | 0-5% |
| Medical devices, thermometers | 12-18% | 5% |
| Insurance premiums (life, health, family) | 18% | Nil |
| Item | Old GST | New GST |
|---|---|---|
| Shampoo, hair oil | 18% | 5% |
| Toothpaste, soap | 18% | 5% |
| Utensils, kitchenware | 12% | 5% |
| Item | Old GST | New GST |
|---|---|---|
| TVs, refrigerators, ACs, washing machines | 28% | 18% |
| Small passenger vehicles | 28% | 18% |
| Item | Old GST | New GST |
|---|---|---|
| Hotels ≤ ₹7,500/night | 12% | 5% |
| Health clubs, gyms, beauty services | 18% | 5% |
| Life/health insurance | 18% | Nil |
| Item | Old GST | New GST |
|---|---|---|
| Cement | 28% | 18% |
| Item | Old GST | New GST |
|---|---|---|
| Manmade yarn/fibre | 12-18% | 5% |
| Apparel/footwear (mass mkt.) | 12% | 5% |
| Item | Old GST | New GST |
|---|---|---|
| Luxury vehicles, aircraft, yachts | 28% + cess | 40% |
| Pan masala, tobacco, aerated drinks | 28% + cess | 40% |
| High-end motorcycles | 28% | 40% |
Who Gains and What’s Next
With rate cuts targeting the broad base of daily consumables and everyday services, India’s middle class and MSMEs gain the most. The move is widely expected to lower inflationary pressures, put more money in the average household’s pocket, and simplify business compliance. Importantly, the few upward revisions—largely confined to ultra-premium cars, tobacco, and luxury goods—help compensate for revenue gaps while nudging better public health outcomes.
India’s GST reform in 2025 is more than just a rate rationalization; it is a structural overhaul designed to revitalize consumption, enhance compliance, and fuel broad-based economic growth. With most goods and services now in just two brackets, clarity returns for the consumer, and the dream of “one nation, one tax” comes a little closer to reality.
For households, industry, and investors, India’s 2025 GST reform spells welcome clarity and fairer pricing in daily life. It marks a bold step in India’s ongoing economic modernization—simplifying taxes, encouraging spending, and giving the “one nation, one tax” slogan real substance for millions of people.