Prime Minister Narendra Modi on Friday announced a major overhaul of the Goods and Services Tax (GST) regime, calling it a “Diwali gift” for the people of India. The Centre is now working on cutting down the existing four GST slabs to just two—standard (18%) and merit (5%), with only a few items continuing to attract a special 40% tax, such as tobacco, alcohol, pan masala, and online betting.
According to reports, 99% of products currently taxed at 12% are proposed to move to the 5% slab, while 90% of items under the 28% slab are likely to shift to the 18% slab. This will directly reduce prices of a wide range of goods, from household items to electronics and essential services.
The proposal has already been circulated among states and the Group of Ministers (GoM) of the GST Council. A final decision is expected in the upcoming GST Council meeting in September–October, ensuring that the new rates are implemented before Diwali.
Items To Become Cheaper Under 5% Slab
Products that were earlier under the 12% GST slab will now move to 5%, making them more affordable. These include:
- Tooth powder, toothpaste (certain branded variants), and soaps
- Hair oil
- Umbrellas
- Mobiles and computers
- Processed food and packaged foods (condensed milk, frozen vegetables, etc.)
- Water filters, purifiers (non-electric)
- Pressure cookers, electric irons, water heaters, vacuum cleaners (domestic use)
- Sewing machines
- Carriages for disabled persons
- Readymade garments (above ₹1,000) and footwear (₹500–₹1,000 range)
- Most vaccines, diagnostic kits (HIV, Hepatitis, TB)
- Ayurvedic and Unani medicines
- Exercise books, geometry boxes, maps, globes
- Cookware and utensils (aluminium, steel)
- Bicycles, non-kerosene stoves, barbecues
- Liquid soap
- Public transport vehicles (when sold, not for fare)
- Glazed tiles (basic, non-luxury)
- Pre-fabricated buildings, vending machines
- Agricultural equipment (mechanical threshers)
- Solar water heaters
Items To Become Cheaper Under 18% Slab
Items currently taxed at 28% will now move to 18%, significantly reducing costs for consumers. These include:
- Insurance (may even move to zero in some categories)
- Cement and ready-mix concrete
- ACs, refrigerators, washing machines, televisions
- Car and motorcycle seats
- Aerated water
- Dishwashers
- Aircraft for personal use
- Protein concentrates, sugar syrups, coffee concentrates
- Dental floss, razors, manicure/pedicure kits
- Commercial plastic products, rubber tyres
- Printers, tempered glass, aluminium foil, plaster
With this reform, the government aims to lighten the tax burden on the common man, boost MSMEs, and stimulate the economy ahead of the festive season. Everyday essentials, appliances, and even insurance will become cheaper, making this Diwali a truly “double Diwali” for households and businesses alike.
