New GST rates in effect: 10 things you need to know about PM's ‘Bachat Utsav’

PRime government minister Narendra Modi on lord's day even said that Indians ar go down to save ₹2.5 lakh crore with the GST rate revisions that came into effect today (September 22), along with income tax reforms announced earlier this year.Calling it a “savings festival,” he noted that the income tax changes primarily benefited the middle class, while the GST cuts are providing relief to the poor and the expanding middle class.Starting today, the first day of Navaratri, reduced GST rates on about 375 items are in force, making a wide range of goods and services — from kitchen essentials and medicines to electronics, equipment, and automobiles — more affordable.What you need to know about GST 2.0The new system introduces a two-tier structure, with most goods and services taxed at 5% or 18%, while ultra-luxury items face a 40% levy. Tobacco and related products remain in the 28% bracket, with an additional cess.Until now, GST was applied across four slabs — 5%, 12%, 18%, and 28% — along with a compensation cess on luxury and “sin” goods.Everyday essentials such as ghee, paneer, butter, snacks, ketchup, jam, dry fruits, coffee, and ice cream, as well as aspirational goods like TVs, air conditioners, and washing machines, will now become cheaper.PM Modi urged citizens to buy swadeshi products, saying the new GST reforms would boost growth, ease business operations, and attract investors.The Opposition, however, criticised the changes as “a band-aid on deep wounds” and demanded an apology for taxing essential goods in the first place.Policymakers hope that stronger domestic demand will cushion India against the impact of US tariffs on merchandise exports.In his address, the Prime Minister underlined the benefits for small and medium enterprises (SMEs), highlighting that lower taxes would enhance competitiveness and support an economy largely driven by small businesses.This marks the biggest revamp of India’s consumption tax since GST was introduced in 2017, simplifying the system from four slabs to primarily two.The reforms are expected to spur consumption across key sectors. Lower automobile prices could attract first-time buyers and encourage upgrades, boosting demand in manufacturing, components, and financing. Similarly, reduced prices on household goods and appliances — timed with the festive season — are likely to drive sales across FMCG networks, retail chains, and e-commerce platforms.