From Food to Footwear: What gets cheaper and costlier from Sep 22 under GST 2.0

With the implementation of a new indirect tax system (5% and 18% slabs) essential items, from milk and dry fruits to footwear and fertilisers, will become cheaper starting September 22. Meanwhile, sin goods like tobacco and sugary drinks face a steep 40% GST, with stricter valuation norms.

New Delhi: The GST Council on Wednesday approved historical changes to India’s indirect tax structure — adopting a 5 per cent and 18 per cent tax structure — and several daily-use goods will become cheaper from September 22.

From groceries and fertilisers to footwear, textiles, and even renewable energy, a broad basket of goods and services is set to become more affordable. Items earlier taxed at 12 per cent and 28 per cent will now largely migrate to the other two slabs, making a wide range of products cheaper.

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Food and daily essentials

Milk products: Ultra-high temperature (UHT) milk will now be tax-free (down from 5 per cent), while condensed milk, butter, ghee, paneer, and cheese have moved from 12 per cent to 5 per cent or nil in some cases.

Staple foods: Malt, starches, pasta, cornflakes, biscuits, and even chocolates and cocoa products will see rates reduced from 12–18 per cent to 5 per cent.

Dry fruits and nuts: Almonds, pistachios, hazelnuts, cashews, and dates, earlier taxed at 12 per cent, will now attract just 5 per cent.

Sugar and confectionery: Refined sugar, sugar syrups, and confectionery items like toffees and candy have shifted to the 5 per cent slab.

Other packaged foods: Vegetable oils, animal fats, edible spreads, sausages, meat preparations, fish products, and malt extract-based packaged foods have been moved to the 5 per cent slab.

Namkeens, bhujia, mixture, chabena and similar edible preparations ready for consumption form (other than roasted gram), pre-packaged and labelled to go from 18 per cent to 5 per cent.

Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter, nor flavoured to move from 18 per cent to 5 per cent.

Agriculture and fertilisers

Fertilisers are down from 12 per cent/18 per cent to 5 per cent.

Select agricultural inputs, including seeds and crop nutrients, have been rationalised from 12 per cent to 5 per cent.

Healthcare

Life-saving drugs, health-related products, and some medical devices have seen rate cuts from 12 per cent/18 per cent to 5 per cent or nil.

Consumer goods

Entry-level and mass-use items like select electrical appliances will move from 28 per cent to 18 per cent.

Footwear and textiles have seen GST cut from 12 per cent to 5 per cent, reducing costs for mass-market products.

However, certain goods and services remain firmly under higher taxation.

Pan masala, gutkha, cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and bidi will continue under existing high GST rates and compensation cess until outstanding cess-linked loans are cleared.

Additionally, the valuation of these products will now be shifted to Retail Sale Price (RSP) instead of transaction value, tightening compliance.

All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured to go from 28 per cent to 40 per cent.

A new 40 per cent slab for sin and luxury goods remains, ensuring that items like cigarettes, premium liquor, and high-end cars don’t see tax relief.

Imported armoured luxury sedans will be exempt only in special cases, such as those brought in by the President’s Secretariat.