Indian consumers are poised for a more affordable festive season as the Goods and Services Tax (GST) Council unveils sweeping cuts on everyday goods, services and big-ticket items.
The reform follows Prime Minister Narendra Modi’s Independence Day assurance to reduce household expenses and bolster consumer sentiment ahead of key festivals.
Replacing the previous four-tier structure with a simplified two-rate system of 5% and 18%, the Council has delivered its most consumer-focused overhaul since GST’s launch in 2017.
The new rates will take effect from September 22, 2025, timed with the start of Navratri and the first wave of festive shopping.
Prime Minister Modi described the changes as ‘next-generation GST reforms’, stating that the Union and the states had collectively agreed on measures designed to improve everyday living, strengthen the economy and ease doing business for small traders and enterprises.
Cheaper Staples & Household Products
A wide array of kitchen staples has shifted to lower tax brackets. Milk, paneer, butter, cheese, pasta, biscuits, jams, sauces, namkeens and ice cream will now cost less, reducing the burden on family budgets during festive celebrations.
Personal care products such as shampoos, soaps, toothpaste, hair oil, talcum powder and shaving goods will carry only 5% GST.
Gifts and household items, including toys, handicrafts, candles and sports equipment, have also become more affordable, encouraging families to plan for festivals.
For households eyeing major purchases, air-conditioners, dishwashers and televisions, including LED and LCD models, projectors and set-top boxes, have moved from 28% to 18% GST.
Retailers are anticipating a surge in demand for these products during Diwali and Christmas as price reductions take hold.
The Council has also reduced taxes on services central to festive spending.
Meals at restaurants will now attract just 5% GST, easing the cost of family outings. The government will tax hotel stays priced under ₹7,500 per night at 12%, while keeping budget stays under ₹1,000 GST-free, giving households more flexibility to plan holidays and reunions.
Industry observers say the timing of the cuts could act as a catalyst for consumption, revitalising the FMCG sector and boosting investor confidence. By aligning the tax overhaul with the festive season, the government hopes to energise demand and provide timely relief to millions of households nationwide.
Also Read: GST Cuts Set To Spark Festive Demand Surge From September 22
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