GST Revamp: What Gets Cheaper, What Gets Costlier; Industry Reacts

The 56th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman was held in New Delhi, and it has brought in some of the most significant reforms since the tax was first introduced. Set to take effect from September 22, the tax structure is being streamlined from four slabs to just two; 5% and 18%, along with a new 40% rate for luxury and sin goods.

Focused on rationalisation of tax rates and next-generation reforms, the Council’s decisions are set to impact consumers and industries alike, making essential items and automobiles more affordable while providing relief to key sectors like infrastructure and housing.

What Gets Cheaper

One of the most striking outcomes of the GST revamp is the reduction in tax slabs on several goods. Automobiles such as the Maruti Swift, Hyundai i10, Tata Harrier, Brezza, and Skoda models will see reduced prices, bringing cheer to car buyers ahead of the festive season. Everyday essentials and selected household goods are also expected to become more affordable, putting more money back in the hands of consumers.

Here's the list of goods which have reduced GST on them:

• Staples & Groceries: Chapati, paratha, UHT milk, paneer, butter, ghee, snacks like namkeen, dry fruits, cookies, biscuits, corn flakes, and packaged drinking water now attract a lower GST of 0-5%.
• Personal Care & Household Goods: Items like shampoo, soap, toothpaste, talcum powder, toothbrushes, tableware, combs, umbrellas, and kitchen utensils move to 5% slab.
• Electronics & Automobiles: TVs, air conditioners, and small cars, previously at 28%, now fall under the 18% bracket, including motorcycles ≤350cc and auto components.
• Healthcare & Insurance: Medicines, diagnostic kits, medical devices, health and life insurance premiums now qualify for 5% or are fully exempt.
• Agriculture Inputs: Fertilisers, seeds, micro-nutrients, and agricultural machinery like drip irrigation components now attract just 5% GST.
• Renewables: GST cuts from 12% to 5% on solar cookers and water systems boost clean energy adoption.
• Farm Equipment: Sewing machines, hand pumps, and tractor parts now fall under the reduced 5% slab.
• Hospitality & Fitness: Gym memberships, salon services, hotel rooms under ₹7,500, and economy flight tickets now attract just 5% GST.

What Gets Costlier

While the essential products have got cheaper, the luxury and sin goods have seen a hike. Here's a list:

• Sin & Luxury Goods: A new 40% GST slab targets cigarettes, pan masala, gutkha, carbonated and caffeinated drinks, in line with health and revenue goals.
• High-End Vehicles & Leisure: Luxury cars, yachts, aircraft, IPL tickets, online gaming, and casino services now face higher taxation. EVs above ₹40 lakh and premium hybrid vehicles also fall into this bracket.
• Coal & Energy Products: GST on coal may rise from 5% to 18%, potentially increasing fuel costs.

A Boost to Real Estate and Infrastructure

A landmark decision was the reduction of GST on critical construction materials. Rates on cement and steel have been cut from 28% to 18%, significantly easing input costs for developers. This move is expected to accelerate infrastructure development, reduce housing costs, and boost the government’s Housing for All vision by making homes more accessible to buyers.

Niranjan Hiranandani, Chairman of Hiranandani Group and NAREDCO National, hailed the reforms as transformative,“The GST rationalisation is a festive bonanza for Indian consumers and a strategic boost for the economy. By enhancing purchasing power, stimulating consumption, and helping contain inflation, this reform creates a multiplier effect that will propel India’s GDP growth beyond 8%. At a time of global uncertainty, such fiscal stimulation underscores the resilience of our domestic economy and strengthens confidence in India’s growth trajectory. Industry and consumers alike stand to benefit from this progressive step.”

He further added,“For the real estate and infrastructure sectors, the reduction of GST on critical construction materials like cement and steel from 28% to 18% is a landmark reform. This will significantly ease input costs, improve project viability, and accelerate infrastructure development across the country. Affordable housing, in particular, stands to gain as reduced construction costs can be passed on to homebuyers, making homes more accessible while supporting the government’s Housing for All vision. This rationalisation is not just a boost for developers, it is a win-win for consumers, the housing sector, and India’s long-term growth story.”

The Bigger Picture

With these reforms, the GST Council has not only aimed at reducing consumer prices but also provided a stimulus to core sectors of the economy. By rationalising tax rates, the government seeks to strike a balance between boosting consumption, maintaining fiscal discipline, and supporting long-term economic growth.

The timing of this revamp, just ahead of the festive season, adds to its impact, giving both consumers and industries a reason to celebrate.