‘Bachat Utsav’GST 2.0 price reduction takes effect: a great relief for daily necessities, cars, insurance – see list

Cheap price to cut GST speed: A day after Prime Minister Narendra Modi described the next-generation GST reforms as a ‘bachat utsav’ (festival of savings) set to begin with Navaratri, the central government’s 2.0 indirect tax system came into force on Monday, September 22. The implementation of the GST 2.0 rate cuts make a large number of items cheaper, ranged from FMCG products to cars to Insurance. The lawsuit is set to cost Rs 4.8 crore in the centre, with an estimated nearly Rs 2 lakh of consumers in the hands of consumers and introduced an income tax exemption earlier this year.

What is the GST 2.0 reform?

Finance Minister Nirmala Sitharaman said GST 2.0 will help consumption, ease inflation and provide a stronger growth environment for smaller businesses.

The new GST system simplifies the indirect tax system to two tablets: 5% and 18%. A 40% GST rate is charged on sinful goods and super luxury items (such as cigarettes).

With this significant change, daily necessities such as medicines, milk products, packaged foods, toothpaste, soap, shampoo and talc now attract only 5% tax, rather than the early 12-18%. Now, over 30 life-saving drugs used for cancer, cardiovascular and rare diseases are now completely exempt from GST. Additionally, bed equipment and diagnostic kits will see a sharp reduction to 5%.

Health and life insurance products are tax-free, providing direct benefits to millions of policyholders. Among everyday items, a bottle of railway NEER (specially packaged water provided on the Indian railway network) will now 14 rupees per litre and 9 rupees per 500 ml, while Amul lowers retail prices such as ghee, butter, bakery products and ice cream.

The largest tax overhaul since independence

With this launch, GST 2.0 marks one of the largest tax reviews since independence, promising lower household bills, cheaper essentials and a simpler enterprise system.

The government has released a series of documents covering frequently asked questions about tax changes (FAQs) to simplify new structures and rates for ordinary people.

Read also: Cut GST: Government Issues New Frequently Asked Questions, Clarifying Changes in Goods, Exemptions, Arts and Certifications

Here is a quick look at Monday, September 22, as GST 2.0 slows down:

• Drugs: Taxes dropped from 12% to 5%; 36 life-saving drugs are fully tax-free
• Medical Equipment and Diagnostic Kit: GST reduced to 5%
• Insurance: No tax on personal life and health insurance policies
• Daily Items: Ghee, Butter, Pane, Toothpaste, Soap, Shampoo, Talc Powder is now taxed 5%
• Consumer durables: TVs, ACS, washing machines, dishwashers, refrigerators are now cheap
• Cars: Large cars drop from 50% to 40%; small cars 18%
• Health Services: Salon, fitness center, health club, yoga, 5% without input tax credit (ITC)
• Cement: GST dropped from 28% to 18%
• Railway NEER: Cut one liter bottle into Rs 14; 500 ml to Rs 9

Also Read: “Bachat Utsav” (Saves Festival) begins on September 22 to accelerate the country’s growth story: PM Modi launches on GST 2.0