Have you noticed how even the smallest rise in grocery bills feels like a burden? Now imagine the opposite—a small but steady drop in prices. That’s what India’s latest GST reform (GST 2.0) promises. Starting September 22, the government has slashed tax rates on hundreds of household items.
But here’s the real question: how much money will actually stay in your pocket after this GST cut? Let’s break it down in simple terms.
What Changed in GST?
Earlier, India had four main GST slabs—5%, 12%, 18%, and 28%. This often confused both shopkeepers and customers. Now, the government has simplified the system into just two slabs:
- 5% GST (for most essentials)
- 18% GST (for higher-value goods and services)
The 12% and 28% slabs have been removed.
This restructuring has shifted many common products into the lower 5% category, and some essentials are now completely tax-free.
What Does This Mean for Your Monthly Budget?
According to a joint report by FICCI and the Thought Arbitrage Research Institute (TARI), households could save anywhere between ₹58 to ₹88 per month on average.
At first glance, this may not sound huge. But think about it this way—if you save even ₹60 every month without making any effort, that’s over ₹700 a year. And if your family spends more on groceries, household items, or insurance, your annual savings could go up to ₹15,000–₹20,000, according to some calculations.
Items That Got Cheaper
Here’s where you’ll notice the difference:
- Flour (atta): GST cut from 5% to zero.
- Edible oils: Reduced from 18% to 5%.
- Packaged rice and pulses: Reduced from 12% to 5%.
- Soaps and toothpaste: Lower GST compared to before.
- Clothing, shoes, and insurance premiums: Lower annual tax burden.
Meanwhile, items like milk remain unaffected since they already had zero GST.
Why Villages May Benefit More
The GST reform isn’t just about urban households. Rural families are also expected to save more.
- Earlier, about 56.3% of rural goods were either tax-free or in the low-tax category.
- Now, this number jumps to 73.5%.
For city households, the jump is from 50.5% to 66.2%.
This means both rural and urban families will feel a little more relief at the cash counter.
Real-Life Example: A Family of Four
Let’s put numbers to this.
Take a family with two kids. They regularly buy flour, rice, cooking oil, soap, toothpaste, and a few clothing items. With the new GST cuts:
- Kitchen savings: ₹500–₹1,000 per month
- Household essentials (soap, toothpaste, etc.): Additional ₹200–₹300 per month
- Annual clothing, footwear, and insurance: Extra ₹10,000–₹12,000 saved
In total, such a family could save ₹15,000–₹20,000 a year—enough to cover a short vacation, pay school fees, or add to savings.
Why This Matters
The savings may feel small at first. But here’s the thing—when millions of families save together, they spend that extra money elsewhere. This means:
- More spending on local shops and services.
- A boost for retail businesses.
- More breathing room for middle-class households battling rising costs.
In short, the GST cut is not just about numbers. It’s about giving families a little more freedom with their money.
Final Thoughts
The new GST rates simplify taxation, reduce household stress, and make everyday essentials more affordable. Even if the immediate savings don’t look massive, they add up over months and years. And in today’s world, every rupee saved really does count.
Frequently Asked Questions
Q1: Which items are now tax-free after the GST cut?
Items like flour (atta) and some basic essentials are now completely tax-free. Previously, flour had a 5% GST, which has been removed.
Q2: Will milk and fresh vegetables get cheaper after GST reform?
No. Milk, fresh fruits, and vegetables already had zero GST earlier, so their prices remain the same.
Q3: How much can an average family save per year after the GST cut?
While the average monthly savings are estimated at ₹58–₹88, a typical family of four could save up to ₹15,000–₹20,000 annually if you include groceries, household goods, clothing, and insurance.