The Central government’s GST Council has rolled out major changes to India’s Goods and Services Tax (GST) structure, aiming to simplify taxation and bring relief to the common man. But how much will these reforms actually impact everyday expenses?

🏷️ Two-Tier GST System Comes Into Effect

On 3 September 2025, the GST Council announced a shift to a two-tier GST system, replacing the earlier multi-level tax structure. These reforms officially came into effect on Monday, 22 September 2025.

Under the new regime:

  • Goods will be taxed at 5% and 18% rates.

  • Many items have been moved to the lower 5% slab, resulting in immediate price reductions for consumers.

This structural simplification aims to make taxation easier for businesses while boosting the purchasing power of ordinary citizens.

💵 How Much Will the Common Man Save?

Amid the buzz on corporate impact and commodity pricing, the real question is—how much will a middle-class individual actually save?

Saurabh Agarwal, Partner at Ernst & Young (EY), shared insights on social media platform X:

“The price cuts on daily essentials—from food to medical bills—are expected to save a person earning ₹50,000 per month approximately ₹1,275 monthly—an effective 2.55% increase in disposable income.”

These savings may seem modest, but they translate into enhanced spending power and a boost to household budgets, potentially cushioning the economy from global uncertainties.

🛒 Items Becoming Cheaper

According to Mint, around 375 items will see a reduction in GST, including:

  • Food staples: Milk, coffee, condensed milk, biscuits, butter, cereals, corn flakes, drinking water (20-litre packs), dry fruits

  • Personal care: Face cream, face powder, after-shave lotion

  • Electronics & appliances: Air conditioners (ACs), televisions (TVs), dishwashers, washing machines

  • Automobiles: Certain vehicle categories now fall under the lower tax bracket

These changes are expected to make a noticeable difference for families and individuals across India.

⚠️ Items Facing Higher GST

Not all products are getting cheaper. The luxury and sin goods category will face higher taxes:

  • Sin goods: Pan masala, gutka, tobacco products, cigarettes – 40% 

  • Luxury vehicles: Cars above 1,200cc engine capacity and length >4 metres, two-wheelers above 350cc – 40% GST

  • Soft drinks and other non-alcoholic beverages – also subject to 40% GST

This ensures that while essential goods become affordable, luxury and harmful items contribute more tax revenue to the exchequer.

✅ Final Words

The GST rate cut brings tangible relief for the common man, increasing disposable income and encouraging spending on essential goods. While luxury items will cost more, everyday Indian families stand to benefit from cheaper groceries, medicines, and electronics, giving the economy a much-needed boost.