GST 2.0: What Gets Cheaper, What Doesn’t – A Consumer’s Guide

 GST 2.0: The Next Phase of India’s Indirect Tax Reform

India’s Goods and Services Tax (GST), introduced in 2017, was designed to unify and simplify the indirect tax structure across the country. But over the years, as the economy evolved, certain complexities, anomalies and inefficiencies in the original GST regime became more visible. GST 2.0 is the government’s response: an upgraded, rationalised version of the GST system which came into effect on 22 September 2025.

India’s taxation system just got a major upgrade. With the launch of GST 2.0 on September 22, 2025, consumers across the country are asking a simple question: “What’s going to cost me less — and what isn’t?”

This blog breaks it down for you in plain language — no jargon, no fluff — just straight answers on what’s cheaper, what’s not, and how GST 2.0 affects your wallet.

 What is GST 2.0?

GST 2.0 is the government’s overhaul of the original Goods and Services Tax that was rolled out in 2017. It’s a simplified, rationalised version of the tax system, aimed at:

• Reducing tax rates on everyday goods
• Eliminating confusing multiple slabs
• Boosting consumer spending
• Supporting economic growth

 What Gets Cheaper Under GST 2.0?

Let’s get to the good news first — the products and services that will now cost you less.

1.  Small Cars

If you’re planning to buy a small car (especially under 1200cc engine capacity), now’s the time.

• Old GST Rate: 28% + cess
• New GST Rate: 18% (no cess)
• Savings: ₹50,000 to ₹1.3 lakh, depending on model

Example: Maruti Suzuki, Hyundai, Tata Motors have announced price cuts up to ₹1.29 lakh.

2.  Two-Wheelers (Under 350cc)

For commuters and college students, this is big.

• Old GST Rate: 28%
• New GST Rate: 18%
• Savings: ₹5,000–₹15,000+

Brands like Hero, TVS, and Honda have dropped prices accordingly.

3.  FMCG Products

Your daily use items just got more affordable.

• Examples:
• Soaps
• Toothpaste
• Shampoos
• Packaged snacks
• Biscuits
• Cooking oil
• Old GST Rate: 12%–18%
• New GST Rate: 5%

FMCG companies are adjusting pricing, with many “magic price points” (₹1, ₹2, ₹5 packs) seeing realignment.

4.  Consumer Electronics & Appliances

Planning to buy a TV, refrigerator, or air conditioner? Good news.

• Old GST Rate: 28%
• New GST Rate: 18%
• Savings: ₹1,500 to ₹15,000+

Most brands have announced post-GST price drops. Expect festive deals to include additional discounts.

5.  Health & Life Insurance Premiums

Earlier taxed at 18%, now:

• New GST Rate: 0%
• Effect: Lower premium payable by you, more affordable policies

This helps especially for senior citizens and those buying family floater health plans.

6.  Stationery & Education Supplies

Perfect for students, parents, and teachers.

• Notebooks, pens, pencils, erasers, etc.
• Old GST Rate: 12%
• New GST Rate: 5%

7.  Staple Foods and Essentials

No more confusion over tax on basic items.

• Bread, roti, fresh milk – 0%
• Packaged pulses, flour – 5%
• Tea, coffee (except instant) – 5%

Your grocery bills could see a 5–10% drop.

8.  LED Bulbs & Energy-Efficient Products

In line with sustainability goals, many green products are now in the 5% slab.

 What Doesn’t Get Cheaper (and May Get Costlier)

Not everything sees a price cut. Some goods/services remain high-taxed due to their luxury or “sin” classification.

1. Luxury & SUV Cars

• New GST Rate: 40% (includes cess)
• Examples: Mercedes-Benz, Audi, high-end SUVs

Some models may even become more expensive depending on the brand’s pricing strategy.

2.  Superbikes & High-Performance Two-Wheelers

• Engine capacity above 350cc (e.g., Harley-Davidson, Kawasaki Ninja)
• New GST Rate: 40%

These bikes were already expensive — GST 2.0 doesn’t offer any relief.

3.  Tobacco, Cigarettes, Pan Masala

• Heavily taxed under “sin goods” category
• New GST Rate: 40% + additional cess

Prices will stay high or even rise — intended to discourage consumption.

4. Alcohol & Petrol/Diesel

• Still outside GST, taxed by individual states
• No change under GST 2.0

Don’t expect any drop in alcohol or fuel prices due to GST changes.

5.  Gold, Precious Stones & Jewellery

• These continue to have special tax rates
• Gold: Still taxed around 3% GST
• No major changes in this segment

6.  Business-Class Air Travel

• Old GST Rate: 12%
• New GST Rate: No reduction; might even be higher with cess

Economy class remains relatively unaffected.

Quick Price Comparison: Before & After

Item	Old GST Rate	New GST Rate	Impact on Price
Small Cars	28% + cess	18%	₹50K–₹1.3L cheaper
Two-Wheelers < 350cc	28%	18%	₹5K–₹15K cheaper
Refrigerator / AC / TV	28%	18%	₹1.5K–₹15K cheaper
FMCG (Soaps, Snacks, etc.)	12–18%	5%	5–10% cheaper
Health / Life Insurance	18%	0%	Lower premiums
Luxury Cars / Superbikes	28% + cess	40%	Same or costlier
Cigarettes / Pan Masala	28% + cess	40% + more cess	Costlier
Grocery Staples (Rice, Wheat)	0–5%	0–5%	No change / Slight drop
Petrol, Diesel, Alcohol	Outside GST	Outside GST	No change

 What Do Consumers Say?

• Ashok (Bangalore, IT professional):
  “I bought a two-wheeler just last month. Now I see I could’ve saved ₹10,000 — wish GST 2.0 came sooner!”
• Neha (Mumbai, Homemaker):
  “My monthly grocery bill is already ₹500 less. It may not sound like much, but it adds up.”
• Ravi (Delhi, Small Business Owner):
  “The lower GST on ACs helped me set up my shop affordably. It’s a real difference.”

 How to Maximise Your Savings

Here are some smart consumer tips to take full advantage of GST 2.0:

1. Wait for Updated Pricing:
   Some older stocks may still carry higher MRP (based on pre-GST 2.0 rates). Look for new labels or updated invoices.
2. Compare Brands:
   Not all brands pass on benefits equally. Do a quick price check before you buy electronics, bikes, etc.
3. Buy During Offers/Festivals:
   With reduced GST + festival season offers, you can stack discounts for maximum benefit.
4. Ask for GST Bills:
   Always demand a proper GST invoice — helps you know if the benefit is being passed on.

 What to Watch Out For

• Inventory Lag: Some shops may still sell items with old pricing.
• Price Stickiness: Businesses may not immediately reduce prices even after lower GST.
• Confusion on Slabs: Some items may fall into exceptions — ask questions or refer to official lists.

 Final Thoughts

GST 2.0 is good news for most Indian consumers. It reduces the cost of living for middle and lower-income groups by slashing tax on essentials, vehicles, electronics, and insurance. However, it leaves luxury items and sin goods untouched — or even makes them pricier.

In short:
Everyday products = Cheaper
 Luxury & harmful goods = Same or costlier

 Pro Tip:

Use GST 2.0 as a reason to revisit your budget. Maybe it’s time to buy that scooter, upgrade your fridge, or invest in a health plan — all while saving tax!

Concluding Thoughts

GST 2.0 marks a bold and significant step in India’s indirect tax evolution. By simplifying slabs, lowering rates on many essential goods, removing or reducing cesses, and making taxation more transparent, the reform aims to ease the tax burden on consumers, boost demand, and stimulate economic growth.

However, success will depend on real implementation: how quickly benefits reach consumers, how businesses adjust, and whether increases in volume and consumption can compensate for revenue losses. Policy clarity in the coming months, vigilant monitoring of inflation & price pass‑through, and active citizen awareness will determine just how transformative GST 2.0 becomes.

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