GST 2.0: Cars, medicines, textiles & more; what gets cheaper, costlier from Sept 22

New Delhi: The GST Council has approved sweeping changes to India’s indirect tax system, introducing a simplified two-slab structure of 5 per cent and 18 per cent. Starting September 22, a wide range of goods and services will become cheaper, while certain sin and luxury items will face steeper levies.

Several products earlier taxed at 12 per cent or 28 per cent will now fall under the lower slabs. This move will make groceries, fertilisers, footwear, textiles, renewable energy items, and even healthcare products more affordable.

Food and essentials
Ultra-high temperature (UHT) milk will now be tax-free, while condensed milk, butter, ghee, paneer, and cheese shift from 12 per cent to 5 per cent or nil. Everyday staples such as pasta, starches, malt, cornflakes, biscuits, chocolates, and cocoa-based products move from 12–18 per cent to 5 per cent. Dry fruits, including almonds, pistachios, hazelnuts, cashews, and dates, also fall to 5 per cent.

Refined sugar, syrups, and confectionery items like candies and toffees will attract the same lower rate. Vegetable oils, edible spreads, sausages, meat, fish preparations, and other packaged foods have been cut to 5 per cent. Popular snacks like namkeens, bhujia, and mixtures drop from 18 per cent to 5 per cent. Even bottled waters, including mineral and aerated types without added sugar or flavour, fall to 5 per cent.

Agriculture and fertilisers
The GST Council has slashed tax rates on a wide range of farm-related products, offering relief to both farmers and consumers ahead of the festive season. Tax on agricultural machinery has been reduced from 12 per cent to 5 per cent. This includes fixed-speed diesel engines not exceeding 15HP, hand pumps, drip irrigation nozzles, sprinklers, machinery for soil preparation, harvesting and threshing, composting machines, tractors (except high-capacity road tractors), self-loading agricultural trailers, and hand-propelled vehicles like carts.

Key fertiliser inputs such as sulphuric acid, nitric acid, and ammonia will now attract 5 per cent tax instead of 18 per cent. Fertilisers, crop nutrients, and seeds will also be taxed at 5 per cent, down from 12–18 per cent. Biopesticides like Bacillus thuringiensis, Trichoderma species, Pseudomonas fluorescens, Beauveria bassiana, neem-based pesticides, and NPV-based products have moved from 12 per cent to 5 per cent. Micronutrients covered under the Fertiliser Control Order, 1985, also fall to 5 per cent. Tractor parts, including tyres, tubes, hydraulic pumps, gear boxes, axles, brake assemblies, radiators, and cooling systems, have been brought down from 18 per cent to 5 per cent.

Common use items
Several everyday products will see lower taxes. School-related supplies like erasers, maps, sharpeners, and exercise books have also been made tax-free. Personal-use items such as hair oil, shampoo, toothpaste, toothbrushes, face powder, soap, talcum powder, and cosmetics have been reduced from 18 per cent to 5 per cent. Tooth powder, feeding bottles, utensils, bicycles, bamboo furniture, umbrellas, and combs have moved from 12 per cent to 5 per cent. 

Consumer goods
Mass-use products, including footwear, textiles, and entry-level appliances, will fall under the 5 or 18 per cent slab, reducing costs for households. Cement, earlier at 28 per cent, will now be taxed at 18 per cent.

Autos
The auto sector will benefit significantly from GST restructuring. Small cars, two-wheelers, and hybrids will become cheaper. Petrol, LPG, and CNG vehicles up to 1,200 cc and under 4,000 mm in length, and diesel vehicles up to 1,500 cc and 4,000 mm in length, will now attract 18 per cent tax instead of 28 per cent. Motorcycles up to 350 cc also move to 18 per cent. Electric vehicles remain at 5 per cent.

Larger cars, SUVs, premium vehicles, motorcycles above 350 cc, and racing cars will now face a higher 40 per cent levy. Auto components, including tyres, gears, axles, and brake systems, have seen rates reduced to 18 per cent from 28 per cent. This overhaul is expected to cut prices of mass-use vehicles and components, while keeping luxury and high-end automobiles under heavier taxation.

Healthcare
GST on 33 cancer and rare-disease drugs has been cut from 12 per cent to nil. Life-saving medicines, diagnostic kits, medical oxygen, and health-related devices also move to 5 per cent or nil. Health and life insurance premiums, earlier taxed at 18 per cent, are now exempt.

High-tax category
Products harmful to health, including pan masala, gutkha, cigarettes, chewing tobacco, zarda, and bidis, will continue under higher GST rates with cess. Their valuation will now shift to Retail Sale Price instead of transaction value to improve compliance. Goods with added sugar, sweeteners, or flavouring, including aerated waters, will face a new 40 per cent levy. Imported armoured sedans remain exempt only for special cases such as the President’s Secretariat.

The restructuring marks one of the most significant tax overhauls since GST was introduced, aiming to simplify rates while ensuring essential items become more affordable and luxury or harmful products remain heavily taxed.
(With inputs from PTI, IANS)