Late in the evening on Wed., 03 Sep. ‘25, the Finance Minister of India, Smt. Nirmala Sitharaman officially announced the change in GST slabs. From 4 slabs @ 5%, 12%, 18% and 28%, the Union Government of India has finally reduced the slabs to two.
Now, Indians will pay either 5% or 18% for most items they buy, except for tobaccco products and luxury automobiles. Sin Tax stays!
The three heads under which the mass of India spends – over 180-200 million households – the middle class as we call it- are Roti, Kapda and Makaan.
Food & Grocery
Bread got cheaper now! Yes, all Indian varieties of bread such as Parathas, Parotta and the traditional western variety of breads made of Maida, will now have 0% GST, a huge drop from the current 18%.
Chocolates and Confectionary, Condiments including bhujia and Namkeen, Cheese, butter and other Dairy Products, beverages which include Milk, Dry Fruits, etc. – over 47 items will see a drop to 0% GST from the existing 12%.
Paneer, packed ones as well as sold in loose, roti, chapati, khakra, etc., made from Wheat will see a drop to 0% GST from the current 5% slab.
Overall, a middle-class household accross India with an annual earning of INR 10-20 lakhs will significantly save on their household grocery consumption.
Our beloved cholocates and ice-cream will be charged a mere 5% GST, as against the 18% being charged currently.
Apparel & Clothing
The GST structure for this segment has now been rationalised to 5% and 18%. But this too, comes with a catch.
For apparel, accessories, home improvement products and decorative items which are priced over INR 2,500, the GST is now up from 12% to 18%.
Interestingly, the INR 2,500 – INR 3,000 has been the sweet spot for large, branded apparel brands from conglomerates such as Aditya Birla Fashion, Arvind Retail, Reliance Brands, etc.
For Footwear priced under INR 2,500, the GST has now been reduced from 12% to 5%.
Home Improvement
Building a house for themselves is every Indian’s dream. Granite blocks, Marble and travertine blocks, specified particle boards, etc. with a GST of 12% have been reduced to 5%.
TV, A/c, Washing Machine, etc. will now have a GST @ 18% from the current 28% slab.
Daily use household items such as tooth paste, tooth brush, shaving needs, soap, hair oil, shampoo, etc. will now have a 5% GST, from a high of 12% and 18%.
From a GST of 18%, Wooden products, handdicrafts and leather goods will now have a mere 5%.
Editor’s Note
The reduction in GST slabs has indeed bought in a lot of cheer to the larger section of the population, mostly the salaried class as well as entrepreneurs and traders.
From an execution point of view, for some categories such as clothing, shoes, television sets, etc., the new slabs will commence from the first day of Navarathri, i.e., 22 Sep. ‘25.
However, for FMCG products, especially packaged ones, it would take quite a while for consumers to get a lower price, as it is practically impossible to remove packs with existing MRP from store shelves and replace them with new ones immediately.
The Government has said that the net revenue impact of the new GST slabs will be to the tune of INR 48,000 Cr.
The slabs remain unchanged on several categories such as alcohol, while fuel products such as Petrol, Diesel and related products continue to operate with VAT.
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