GST rate cut: 21 daily-use items that may become cheaper by Diwali 2025

The new GST reforms are expected to be implemented by Diwali this year, as announced by Prime Minister Narendra Modi on Independence Day.

Under the new rules, the centre has proposed to simplify the GST structure by keeping only two tax slabs: 5% for essential goods and 18% for standard goods and services. Further, it has been suggested to levy 40% on demerit (luxury and sin) goods. Currently, there are four slabs: 5%, 12%, 18% and 28%.

The reforms are aimed at rationalising and simplifying the existing tax structure. Most goods under the 12% slab are expected to be brought to the lower 5% slab, and most goods in the 28% slab may be pushed to the 18% slab.

By Diwali, many daily-use items used by Indian households are also expected to get cheaper as a result of GST rate changes.

While the GST Council is yet to decide on the new GST rates, a Bank of Baroda report dated August 28 estimated the list of items that may get cheaper:

Key daily-use items expected to get cheaper by Diwali:

As per the report, the rejig could provide a major breather for middle-class consumers in the country, with the durable goods sector (including AC, LED/LCD TV, Dishwasher, Motor vehicle) and daily-use items expected to get cheaper.

“The migration of major essential items of consumption, especially food items, from the 12% to 5% bracket will provide a major breather for middle-class consumers. The durable goods sector, such as AC, LED/LCD TV, Dishwasher, Motor vehicle and its parts, which have been reeling under pressure for some time, will also get a significant boost as the majority of them have migrated from the 28% slab to the 10% slab,” the report said.

The reforms are also expected to balance the higher tariff impact, and inflation could face downside pressure, it added.