GST 2.0 Rate Cut Explained: Shampoo, Oil, Soap, Milk, Cheese, Ghee, Clothes, TVs and Mobile Phones Now Cheaper Before Diwali

Sep 20, 2025

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GST 2.0 has cut tax rates on essentials and electronics like shampoo, oil, soap, milk, cheese, ghee, clothes, mobile phones and TVs. Know how these changes affect your household budget and the economy.

The Indian government has announced a major tax reform ahead of the festive season, introducing GST 2.0 – a simplified and consumer-friendly rate structure. With new slabs of only 5% and 18%, and many essentials made completely tax-free, this initiative aims to give relief to households and to boost consumption across sectors.

From shampoo and soap to milk, cheese, ghee, clothes, mobile phones and televisions, consumers will now enjoy significant savings. This article explains the changes, their benefits and their impact on the market.

Which Products Became Cheaper Under GST 2.0

The government has rationalized tax rates on a variety of goods. The focus has been on everyday household items and widely used electronic products.

Product Category	Old GST Rate	New GST Rate	Impact on Consumers
Shampoo, Hair Oil, Bath Soap	18%	5%	Lower daily hygiene costs
Biscuits and Namkeen (Snacks)	12%	5%	Affordable snacks
Milk	5%	0% (Tax-Free)	Direct savings for families
Cheese	5%	0% (Tax-Free)	Dairy products cheaper
Ghee and Butter	12%	5%	Lower kitchen expenses
Clothes (up to ₹500)	12%	5%	Big relief for middle class
Television Sets (up to 32 inch)	18%	12%	Electronics more affordable
Mobile Phones	18%	12%	Wider digital access

(Illustrative rates; actual implementation as per government notifications.)

Direct Impact on Household Budget

With daily essentials like shampoo, oil, soap, biscuits and snacks now under a 5% slab, and milk and cheese becoming tax-free, household budgets will see immediate relief. These are items consumed across all income groups, so the benefit is widespread. The cut on clothes and small electronics further supports middle-class and lower-income families who spend carefully during festivals.

Festival Season Benefits

The timing of GST 2.0 is ideal. Diwali, Dussehra and other major festivals are periods of heightened spending. With lower taxes on essentials and electronics, families can now buy more for less. This will stimulate the retail and FMCG sectors, leading to higher sales volumes and more vibrant marketplaces.

Retailers, especially in tier-2 and tier-3 cities, are expecting footfall to rise sharply as shoppers take advantage of lower prices.

Relief for Farmers and Rural Consumers

Tax-free milk and cheese also have an upstream impact. Dairy farmers stand to benefit from increased demand for their produce as lower prices encourage consumption. This is likely to strengthen rural economies, where dairy and related industries provide significant employment.

Broader Market and Economic Impact

The reduction in GST rates is not only a relief for consumers but also a stimulant for businesses. By making essential and semi-luxury items more affordable, the government is encouraging higher turnover for industries like FMCG, textiles, electronics and dairy.

Sector	Likely Impact of GST 2.0
FMCG (Fast Moving Consumer Goods)	Demand surge, higher sales volumes
Dairy Sector	Higher demand, better farm-gate prices for producers
Electronics	Spike in TV/Mobile sales during festivals
Textile Industry	Boost in purchases of affordable garments
Retail Trade	Increased footfall and stronger consumption
Logistics & Supply Chain	Increased movement of goods due to higher demand

This combined effect can help accelerate GDP growth by increasing consumption — a key driver of the Indian economy.

Simpler Tax Structure

Earlier, multiple GST slabs created confusion for both consumers and businesses. By reducing the slabs to primarily 5% and 18%, GST 2.0 makes compliance easier, simplifies billing, and reduces disputes. Businesses can now focus more on sales and service rather than complex tax calculations.

Potential Inflation Control

Inflation has been a concern for households and policymakers alike. With essentials becoming cheaper, the effective inflation for many consumers will come down. This has a psychological effect as well — when people perceive prices to be stable or falling, they are more willing to spend, further boosting demand.

Middle Class and Lower Income Groups Benefit Most

While all consumers gain from lower GST rates, the middle class and lower income groups benefit the most because a larger portion of their income goes towards essentials and low-value electronics. The relief on milk, cheese and clothes up to ₹500, along with cheaper small TVs and mobile phones, directly targets their consumption patterns.

Comparative Summary Table

Aspect	Before GST 2.0	After GST 2.0
Number of Major Slabs	Multiple (5%, 12%, 18%, 28%)	Primarily 5% and 18%
Tax on Milk	5%	0%
Tax on Cheese	5%	0%
Tax on Ghee/Butter	12%	5%
Tax on Shampoo/Soap	18%	5%
Tax on Small TVs	18%	12%
Tax on Mobile Phones	18%	12%
Compliance Complexity	High	Reduced

This side-by-side view shows how the new regime simplifies and reduces the tax burden.

Conclusion

GST 2.0 is more than just a tax cut — it’s a strategic move to stimulate the economy, ease inflationary pressure and give direct relief to consumers. By lowering GST on essentials and electronics before the festive season, the government has put more money in people’s hands, encouraging them to spend more. This will likely lead to higher demand, better sales, and stronger growth across key sectors.

For households, the changes mean lower bills and more affordable shopping during Diwali and beyond. For farmers and businesses, it means increased demand and simplified compliance. Together, these effects can energize the economy during one of the most crucial retail seasons of the year.

Disclaimer: This article is for informational purposes only. Actual GST rates and their implementation dates will apply as per official government notifications. Readers should verify with official sources for the latest updates.