GST Rate Cut from September 22: What Shoppers Should Know Before the Big Festive Sales

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by

Himanshu
in , ,

India is all set for a major overhaul of its GST (Goods and Services Tax) structure, coming into effect from September 22, 2025. With this shift, shoppers can expect lower prices on many everyday goods just ahead of the festive sales season. This blog unpacks what has changed, which items benefit, how businesses are responding, and what consumers should watch out for to ensure they get the real savings.

What Exactly is Changing in GST 2.0

The GST Council has mandated a revamp of the tax slabs. Previously, items were taxed under four or more slabs—5%, 12%, 18%, 28%, etc. Under the new rules:

  • The tax structure simplifies to two primary slabs: 5% and 18%.
  • A third, special slab of 40% is reserved for certain luxury or “sin” goods.
  • Many common goods that were taxed at 12% or 18% will now drop to 5%.
  • Some essentials will become tax-free (0%)—for instance, certain milk products, income & life insurance policies.

These changes are being rolled out just before the big festival shopping season (Amazon Great Indian Festival, Flipkart Big Billion Days, etc.), which means timing and visibility are crucial.

Which Goods Will Become Cheaper & By How Much

Here are some of the items that will benefit significantly from the rate cuts, along with approximate savings and examples of companies passing on benefits:

Item / CategoryOld GST Rate(s)New GST Rate / SituationExample Price Impact
Shampoo, hair oil, toothpaste, soaps18%5%Major FMCG brands already reducing MRP ahead of Sept 22.
Packaged food, butter, cheese, pre-packaged snacks12%5%Groceries expected to drop in price by ~10-15%.
Small cars, two-wheelers (≤ 350 cc)28%18%Honda, Yamaha, etc., have announced price cuts up to several thousands of rupees.
Televisions, air conditioners, electronics28%18%These high-ticket items will become more affordable.
Essentials like milk, paneer, health insurance5% or taxed earlier (or taxed at low slab)0% or reduced rateMilk producers like Mother Dairy are already passing on price cuts.

How Businesses & Industry Are Reacting

  • Many FMCG giants (soap, toothpaste, shampoo manufacturers) have announced they’ll drop MRPs or offer trade discounts so retailers can pass on savings. Storyboard18+1
  • Auto & two-wheeler companies are reducing prices of models that now fall under the lower slab (i.e. ≤ 350 cc).
  • Retail chains are being directed by government departments to display “GST discount” clearly in bills and advertisements. This is part of ensuring transparency.
  • The government has launched the GST Bachat Utsav campaign in partnership with major e-commerce players to make sure customers are aware of savings and these are visible in transactions.

What The Odds Are: Winners vs Losers

GroupLikely to Gain Big
Middle-class consumers, lower-middle income familiesYes — savings on daily essentials, groceries, hygiene products, etc.
Small-ticket electronics and appliances buyersYes — cheaper air conditioners, TVs, etc.
Auto buyers of smaller vehicles, two-wheelersYes to some models; heavy / luxury vehicles still taxed high.
Premium / luxury brands for apparel, cars etc.Partially affected; higher rate slabs or their products may see less benefit or even price increases. Reuters+1

What Shoppers Should Do To Make The Most of The Rate Cut

  1. Delay major purchases (electronics, appliances, vehicle) until after September 22, if possible. That way, you benefit from lower GST.
  2. Check the final price / invoice for “GST discount” or similar line item so you’re sure the tax benefit is passed on.
  3. Compare prices before and after the reforms; some retailers may keep prices high for a little while.
  4. Look for promotions combining festival offers with GST savings — this will give maximum benefit.
  5. Watch packaging / labeling: sellers are advised not to reprint MRPs for old stock; manufacturers need to update labels in new inventory.

Potential Risks & What To Be Aware Of

  • The promised price drops depend on whether sellers and manufacturers fully pass on the savings, not just keep them.
  • Premium / high-end items might see less relative benefit; some may even move into higher slabs depending on category.
  • Inventories purchased before Sept 22 with older tax assumptions could lead to confusion or delayed price adjustments.
  • Retailers may not re-label old stock instantly, so you may see products priced under older GST slabs temporarily.

Big Picture: Why This Matters & What India Can Learn

  • This GST overhaul (sometimes called GST 2.0) is one of the biggest tax reforms in India’s history—intended to simplify tax slabs, reduce consumer burden, and boost demand.
  • It shows what can happen when policy aligns with economic reality—consumer demand, inflation, cost of living all pushed for change.
  • The lesson from the past: reforms must be transparent, communicated well, and benefits must reach the ground (consumers). Price tags, bills, retailer behavior all matter. Otherwise old patterns of sticker-shock or hidden costs persist.

Conclusion

The GST rate cut effective from September 22 is a game-changer for Indian shoppers, particularly in the lead up to the festive shopping season. Essential items, daily-use consumer goods, electronics, small vehicles—all are becoming more affordable. Businesses are repositioning quickly to offer better deals. But real savings depend on how faithfully the tax cuts are passed on.

If you’re shopping this festival, strategise: compare prices, wait for the rate cut, demand clarity on invoices, and take advantage of campaigns like “GST Bachat Utsav.” This could be one of the rare moments when policy, price, and festivity align in favour of consumers.

Disclaimer: This article is based on publicly available policy announcements and media reports. Prices, savings, and impacts may vary based on brand, retailer, region, and inventory. Always verify the final price, invoice terms, and seller practice before purchase.

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