GST 2.0: Big Relief for Households as Milk, Ghee, and Kitchen Essentials Become Cheaper from September 22

Sep 9, 2025

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The Government of India has announced a major reform under GST 2.0, effective from 22nd September 2025, bringing relief to millions of households across the country. The new tax structure has not only simplified the GST system but also reduced the rates on several kitchen essentials like milk, ghee, paneer, butter, and bread. This move is expected to lower household expenses and boost consumer demand ahead of the festive season.

What Is GST 2.0?

GST 2.0 marks the biggest tax overhaul since the implementation of the Goods and Services Tax in 2017. Earlier, India had four GST slabs—5%, 12%, 18%, and 28%. Under the new system, these have been streamlined into two major slabs:

5% (Lower Slab) → For essential items and daily use products.
18% (Standard Slab) → For general goods and services.
40% (Special Slab) → For luxury and sin goods.

This rationalization has been done to make the tax structure simpler, transparent, and consumer-friendly.

GST 2.0: Kitchen Essentials Get Cheaper

The most significant impact of GST 2.0 can be seen in dairy and household products. Essential kitchen items have either moved to the 0% category or have been shifted to a much lower 5% GST slab.

Items Moved to 0% GST (Tax-Free)

Ultra-High Temperature (UHT) Milk
Pre-packaged Paneer / Chhena
Plain Roti, Pizza Bread, Khakhra

This means these items will now be completely tax-free, reducing their market prices directly.

Items Shifted to 5% GST

Earlier taxed at 12%–18%, many popular food items are now under the 5% bracket:

Condensed Milk
Butter, Ghee, Cheese, Dairy Spreads
Plant-based milk drinks (like soya beverages)
Chocolates, Pasta, Namkeens, Baked Goods

Comparison: Old vs New GST Rates

Item	Previous GST Rate	New GST Rate (from 22 Sept 2025)
UHT Milk	5%	0%
Pre-packaged Paneer / Chhena	5%	0%
Plain Roti / Pizza Bread / Khakhra	—	0%
Condensed Milk	12–18%	5%
Butter / Ghee / Cheese / Spreads	12–18%	5%
Plant-based Milk Drinks	18%	5%
Chocolates / Pasta / Namkeens / Baked Goods	12–18% / 18%	5%

Why This Change Matters

Lower Household Expenses – Families will now spend less on daily essentials like milk, ghee, and butter.
Simplified Taxation – Moving from four tax slabs to two makes the system easier for both businesses and consumers.
Festive Season Boost – The timing is crucial as the rate cuts coincide with Navratri and Diwali, encouraging higher spending.
Encouraging Demand – Lower prices are expected to increase sales in the food, FMCG, and dairy sectors.
Wider Economic Impact – Small businesses and kirana stores benefit as compliance becomes simpler and demand rises.

Consumer Impact: What Will Get Cheaper?

Households can expect price drops across:

Milk and dairy products (ghee, paneer, butter, cheese)
Everyday food items (bread, roti, khakhra, namkeens)
Snacks and packaged foods (pasta, chocolates, baked goods)

For the average middle-class family, this could mean monthly savings of ₹500–₹1,000 depending on consumption.

GST 2.0: A Step Towards Growth

By cutting taxes on essentials and simplifying slabs, GST 2.0 is designed to reduce inflationary pressure, increase consumption, and boost economic growth. The government’s move is seen as a consumer-friendly reform that will also support businesses by expanding demand during the festive season.

Final Thoughts

The GST 2.0 reform is a win-win for consumers and businesses alike. Essential kitchen items like milk, ghee, butter, and paneer becoming cheaper will directly benefit households, while the simplified tax system ensures better compliance and reduced complexity. As India prepares for the festive season, GST 2.0 comes as a timely relief that strengthens both purchasing power and economic momentum.