What Will Change After GST Reforms? Check the Complete List of Cheaper and Costlier Items

New Delhi: The central government has rolled out next-generation reforms in the Goods and Services Tax (GST) structure, marking one of the most significant shifts since GST was first introduced. These reforms aim to make the system simpler, more transparent, and affordable for the common man. Announced after the 56th GST Council meeting, the revised tax regime now works on a 2‑rate structure—a merit rate of 5% and a standard rate of 18%—along with a special 40% de‑merit rate for luxury and sin goods. In addition, an extensive 0% (exempt) category has been created for essential items, life‑saving medicines, and crucial services【14†source】.

The Council emphasized that this restructuring would provide relief to families, reduce inflationary pressures, and give businesses, especially small and medium enterprises, a clear path to compliance. Policymakers have called it a “Good and Simple Tax 2.0,” underlining its alignment with the original vision of GST.

Expanded Key Exemptions (0% GST)

The exemption list has been widened to make daily living affordable:

• Insurance Relief: All individual health and life insurance policies, including term insurance, endowment, unit‑linked plans, and senior citizen policies, are now exempt. This measure reduces the financial burden of premiums and encourages higher insurance penetration.
• Medicines: 33 life‑saving drugs that were taxed at 12% are now fully exempt. Additionally, 3 highly critical medicines for cancer and rare genetic diseases have been reduced from 5% to Nil. Other medicines see rates dropping from 12% to 5%, ensuring affordability for patients.
• Food Essentials: Ultra‑High Temperature (UHT milk), paneer/chhena, and all forms of Indian breads such as chapati, roti, paratha, parotta, khakhra, and pizza bread have been moved to Nil.
• Education‑related: Exercise books, graph books, laboratory notebooks, and printed maps are now exempt, reducing schooling costs.
• Other Essentials: Certain agricultural items, biodegradable bags, and wadding products have been shifted to Nil【14†source】.

5% GST Slab (Merit Rate)

This slab has been designed for items of daily necessity and labour‑intensive goods. The goal is to encourage consumption while supporting industries.

• Food & Beverages: Namkeens, bhujia, sauces, pasta, noodles, chocolates, preserved meats, cornflakes, butter, ghee, cheese, dates, dried nuts, fruit juices, tender coconut water, diabetic foods, soups, and even ice creams are now taxed at just 5%. This makes packaged foods and snacks significantly cheaper.
• Personal & Household Goods: Hair oil, shampoos, toilet soap bars, toothpaste, toothbrushes, candles, tableware, kitchenware, and handicraft products (from stone, wood, brass, glass, etc.) are in this slab. Items such as bicycles and pencil sharpeners are also included.
• Agriculture & Farming: Tractors, soil preparation machinery, harvesting equipment, composting machines, irrigation sprinklers, and parts for agriculture now fall under 5%. Manmade fibres, yarns, and certain fertilizers like sulphuric and nitric acid have also been rationalised to this category.
• Healthcare Equipment: Diagnostic kits, medical oxygen, bandages, gauze, wadding, glucometers, syringes, and medical reagents have all been shifted to 5%, bringing down hospital and treatment costs.
• Renewable Energy: Solar power devices, biogas plants, wind turbines, tidal energy equipment, and photovoltaic cells are taxed at 5% to encourage the green economy【14†source】.

18% GST Slab (Standard Rate)

This is the most widely applied slab and now covers items previously taxed at 28%, thereby providing relief in high‑value purchases.

• Consumer Durables & Electronics: Air‑conditioners, televisions (all sizes—previously TVs above 32 inches attracted higher taxes), refrigerators, washing machines, dishwashers, geysers, mixers, toasters, and mobile phones.
• Automobiles: Smaller cars, motorcycles up to 350cc, buses, trucks, and ambulances are consolidated into this slab. All auto parts are uniformly taxed at 18% regardless of their HSN code.
• Construction & Raw Materials: Cement, previously at 28%, is now at 18%, which will bring down real estate and housing costs. Coal, lignite, and peat have moved from 5% to 18%.
• Services: Gym memberships, yoga centres, salon services, and beauty treatments have been reduced from 18% to 5% in some cases, while others remain under the standard 18%【14†source】.

40% De‑Merit Rate

This category is reserved strictly for luxury and sin goods, ensuring they remain expensive and discourage excessive consumption.

• Tobacco Products: Pan masala, gutkha, unmanufactured tobacco, cigarettes, cigars, and reconstituted tobacco products.
• Beverages: Aerated drinks, caffeinated beverages, fruit‑based carbonated drinks, and flavoured sweetened waters are taxed at 40%.
• Luxury Automobiles: High‑end cars, SUVs, and motorcycles above 350cc fall into this slab, along with certain hybrid vehicles exceeding defined engine capacities.
• Exclusion: Liquor for human consumption continues to remain outside the GST framework and is governed by state excise laws【14†source】.

Relief for Families and Businesses

The government has highlighted that these reforms will directly benefit households:

• Middle‑Class Families: A family paying ₹20,000 annually for health insurance will now save ₹3,600 under the new system.
• Healthcare Costs: Medicines, diagnostic kits, and equipment will become cheaper, lowering overall treatment expenses.
• Food Inflation Control: With most essential packaged food items moved to 5% or Nil, the pressure on grocery budgets is expected to ease.
• Business Community: Reduction in cement, auto parts, textiles, and agricultural machinery GST will help manufacturers and traders, increasing competitiveness.

Prime Minister Narendra Modi described the reforms as a “Diwali gift,” while Finance Minister Nirmala Sitharaman stressed that the changes will not only contain inflation but also boost employment and stimulate consumer demand. Experts believe this reform sets the stage for higher growth in manufacturing, agriculture, healthcare, and renewable energy sectors.

Revised GST Rates at a Glance

Reference : https://www.pib.gov.in/PressReleseDetail.aspx?PRID=2163555