GST Rate Cuts Take Effect Today
Consumers can expect lower prices on a wide range of products starting today, thanks to a reduction in Goods and Services Tax (GST) on nearly 375 items. The cuts cover everything from medicines, electronics, and household equipment to cars and kitchen staples.
The GST Council—comprising representatives from both the Centre and the states—approved these changes on September 22, coinciding with the first day of Navaratri, giving shoppers a festive-season boost.
Cheaper Services
- Hotel stays, gym memberships, air travel, and movie tickets will also become more affordable.
- GST on hotel bookings and beauty or wellness services has been reduced from 18% to 5%.
- Movie tickets priced up to ₹100 will now attract a 5% tax instead of 12%, while tickets above ₹100 remain at 18%.
- Hotel rooms costing less than ₹1,000 per night continue to be exempt.
- Rooms priced between ₹1,000 and ₹7,500 will now carry a 5% GST, and those above ₹7,500 will be taxed at 18%.
Higher Tax on Luxury Goods
Certain premium products will see a new 40% GST slab. This applies to luxury and indulgence items such as tobacco and pan masala, as well as specific automobiles and motorcycles.
Petrol vehicles over 1,200 cc and longer than 4 meters, and diesel vehicles over 1,500 cc and longer than 4 meters, will face a 40% tax.
Motorcycles with engine capacity above 350 cc will also be included.
Although the headline rate sounds higher, these vehicles were previously taxed at 28% GST plus a 17% cess—about 45% in total—so the new structure actually reduces the overall burden.
Economic Impact
The government expects this “GST 2.0” to ease costs for households, simplify business transactions, and stimulate growth.
Finance Minister Nirmala Sitharaman said at the Next Gen GST Reforms event in Visakhapatnam on September 17 that the reforms could inject nearly ₹2 lakh crore into the economy.
Chief Economic Advisor V. Anantha Nageswaran noted that higher disposable incomes will strengthen the demand–production cycle, while economist Garima Kapoor of Elara Capital forecast a 1%–1.2% boost in GDP growth over the next four to six quarters.
