Prime Minister Narendra Modi announced a big change in the Goods and Services Tax (GST) system on Friday, calling it a “Diwali gift” for India.
The government plans to reduce the current four GST rates to just two main ones — 18% (standard) and 5% (merit).
Only a few items like tobacco, alcohol, pan masala, and online betting will still have a special high tax of 40%.
Reports say that 99% of items now taxed at 12% will move to the 5% rate, and 90% of products currently at 28% will drop to 18%.
This will lower the prices of many goods, from daily essentials to electronics and services.
The proposal has been shared with the states and the GST Council’s Group of Ministers.
The final decision is expected in the GST Council meeting in September or October, aiming to implement the new rates before Diwali.
Items Becoming Cheaper Under the 5% GST Slab
Many products now taxed at 12% will shift to 5%, making them more affordable. These include:
Tooth powder, toothpaste (some brands), soaps
Hair oil
Umbrellas
Mobile phones and computers
Processed and packaged foods (like condensed milk, frozen vegetables)
Non-electric water filters and purifiers
Pressure cookers, electric irons, water heaters, vacuum cleaners (for home use)
Sewing machines
Carriages for disabled people
Ready-made clothes (above ₹1,000) and footwear (₹500–₹1,000 range)
Most vaccines and diagnostic kits (HIV, Hepatitis, TB)
Ayurvedic and Unani medicines
Exercise books, geometry boxes, maps, globes
Cookware and utensils made of aluminium and steel
Bicycles, non-kerosene stoves, barbecues
Liquid soap
Public transport vehicles (when sold, not for fares)
Basic glazed tiles (non-luxury)
Pre-fabricated buildings, vending machines
Agricultural machines like mechanical threshers
Solar water heaters
Items Becoming Cheaper Under the 18% GST Slab
Items currently taxed at 28% will mostly move to 18%, lowering costs significantly. These include:
Insurance (some categories may even go to zero tax)
Cement and ready-mix concrete
Air conditioners, refrigerators, washing machines, televisions
Car and motorcycle seats
Aerated water
Dishwashers
Personal aircraft
Protein concentrates, sugar syrups, coffee concentrates
Dental floss, razors, manicure and pedicure kits
Commercial plastic goods, rubber tires
Printers, tempered glass, aluminium foil, plaster
With these changes, the government wants to reduce the tax burden on ordinary people, support small and medium businesses, and boost the economy before the festive season.
Essentials, appliances, and insurance will all become cheaper, making this Diwali a real “double Diwali” for families and businesses.
