New Delhi: Prime Minister Narendra Modi this evening announced a sweeping reform of the Goods and Services Tax (GST), set to take effect from midnight of September 22, 2025. The new GST regime aims to ease the burden on low and middle-income households, reduce prices on essential goods, and stimulate India’s economy.
Key changes include a major tax reduction on medicines, with life-saving drugs exempted from GST, while commonly used medicines will see tax rates drop from 12% to 5%. Essential food items such as ghee, paneer, butter, ketchup, jam, soft drinks, coffee, and ice cream will also become cheaper.
Automobiles and two-wheelers will now attract 18% GST instead of 28%, while air conditioners, washing machines, and televisions will also shift to the 18% bracket. Daily-use items like soaps, shampoos, bottled water, and detergents will see taxes cut to 5%. Handicrafts and footwear will also fall under the 5% slab, while notebooks, pencils, and stationery items will be exempted.
Importantly, the GST on cement will drop from 28% to 18%, and alcohol-based sanitizers will now be taxed at 12%.
However, luxury cars above ₹12 lakh and harmful products like cigarettes will continue to attract a 28% tax or higher.
The Prime Minister said that nearly 99% of goods earlier taxed at 12% will now move to 5%, and around 90% of items previously under the 28% slab will be brought down to 18%. Modi described the reform as a “historic step” that would “create opportunities for youth, strengthen households, and accelerate India’s growth story.”
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