Relief for Indian Consumers as GST Rate Cuts from Sep 22, 2025, to Make Products & Services Cheaper

Finally, the day (September 22, 2025) has arrived that India has been waiting for, as prices of essential products and services are set to be cheaper. The reason is that the reduced Goods and Services Tax (GST) rates will take effect on as many as 375 items starting today (The first day of Navratri, this year). This is part of the governments announcement from a month ago regarding the GST reforms aimed at boosting economic growth.

Products That Have Become Cheaper with Reduced GST Rates

The GST Council, comprising Centre and States, has announced reduced tax rates on goods and services from September 22 for consumers. Several consumption products such as butter, paneer, ghee, ketchup, namkeen, coffee, dry fruits, ice creams, and aspirational goods such as AC, washing machines and television have become cheaper. Several FMCG companies have already announced price reductions amid GST rationalization.

Healthcare and Other Products Too Join the LIst of Products with Lower GST Rates

The government has further reduced GST rates on several drugs and formulations, along with medical devices such as glucometers and diagnostic kits, to 5%. As a result, the cost of medicine has reduced substantially for the common man. Pharmaceutical companies have already been told to make MRP revisions and sell medicines at a lower rate after considering the GST cut benefits. Further, the GST on cement has been slashed from 28% to 18%, benefitting home builders.

Automobile Buyers to Benefit the Most from GST Rate Cuts

The GST rate cut will, however, benefit automobile buyers the most as the tax rates for them have been reduced. While the tax rates for small cars have been reduced to 18%, the one for big cars now stands at a lower rate of 28%. In view of GST rate cuts, several automobile companies have announced price reductions.

Whats More on the Product List with Reduced GST Slabs?

On the other hand, the GST rate on beauty and physical well-being services, such as salons, health clubs, fitness centres, barbers, yoga, has fallen to 18% with Input Tax Credit (ITC), to 5% without tax credit. Additionally, daily use products such as toilet soap bars, toothbrush, toothpaste, shampoos and hair oil will see a reduced tax rate of 5% from 12/18%. Other daily use products, such as face powder, talcum powder, after-shave lotion, and shaving cream, will also see a reduced rate of 5% from 18%.

A Glance at GST Rationalization

From September 22, 2025, GST will act as a two-tier structure containing a majority of goods and services within a tax slab of 5% and 18%. Ultra luxury items will, however, attract a tax rate of 40%. At the same time, tobacco and related products will continue to fall under the 28% plus cess category.

Finance Minister Nirmala Sitharaman earlier said that the GST reforms will add INR 2 lakh crore to the economy with more cash in hand to the people of India.

Presently, GST is levied in four slabs - 5%, 12%, 18% and 28%. A compensation cess is further imposed on luxury items and demerit or sin goods. With the announced reforms, approximately 99% of the goods under the 12% GST rate have shifted to 5%. At the same time, 90% of items falling under the 28% tax bracket have now been transitioned to 18%.

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