The 56th GST Council meeting, chaired by finance minister Nirmala Sitharaman, unveiled a comprehensive reform package that can reshape the indirect tax regime. The new GST structure, which took effect on Monday, simplifies the tax regime and provides direct economic relief to consumers nationwide. This reform is not just a policy shift; it’s a transformative step toward making everyday living more affordable, equitable, and transparent.

Prime Minister Narendra Modi termed the reform as a “Diwali gift” to the nation, an apt description for a measure that brings immediate and meaningful relief to Indian households. By consolidating the GST structure into just two slabs, i.e., 5% and 18%, the Centre has significantly reduced the complexity that previously weighed on consumers, making the tax system more transparent and easier to navigate. This move replaces the earlier multi-tiered system, including the 12% and 28% slabs, with a streamlined structure that is easier to understand and more aligned with the needs of the average Indian household.

A reform rooted in everyday consumer realities

At its core, the GST 2.0 is designed to ease the financial burden on Indian households. By slashing taxes on essentials, including food, clothing, housing, and healthcare, the reform delivers tangible savings and boosts disposable income. Packaged food items such as cooking oil, dairy products, baby care items, shampoo, and toothpaste now attract lower GST, making everyday consumption more affordable. This translates into real savings for families.

Healthcare for consumers has also received a major boost. Lower GST rates on medicines and medical devices, from corrective spectacles to select test kits, make treatment more accessible. Similarly, exemptions on life and health insurance policies, including floater plans and senior citizen coverage, ease financial stress and encourage wider insurance adoption. These changes are expected to improve health outcomes and reduce out-of-pocket expenses for millions of Indians.

In a move that directly supports families and students, the GST Council has proposed to exempt essential stationery items such as exercise books, pencils, and other basic learning tools from GST. For families with school-going children, this is a welcome relief that supports the broader goal of inclusive education.

Driving down costs in housing and everyday essentials

Construction and housing sectors are set to become more consumer-friendly. GST on cement has been reduced from 28% to 18%, while rates on building materials like marble and granite have dropped to 5%. These changes are expected to lower the cost of homeownership and renovation, making housing more accessible to middle-class families and first-time buyers.

The reduction in GST on household appliances such as air conditioners, dishwashers, and televisions will also make these products more affordable, improving the quality of life and enabling more families to access modern conveniences.

Consumer food and household budgets

The rationalisation of GST on key staples, including Indian breads, dairy items, and packaged foods, therefore delivers one of the most direct benefits of the reform. By lowering the tax incidence on everyday food purchases, the government has effectively addressed a persistent source of inflationary pressure on households. The timing is particularly significant, as global supply chain disruptions and commodity price volatility have been weighing on kitchen budgets. The reform restores some purchasing power, offering relief across income groups and contributing to stronger consumer confidence.

A milestone in consumer-centric governance

From a macroeconomic perspective, the expected outcome is a virtuous cycle of demand-led growth. With lower prices on essentials and reduced costs across healthcare, housing, and food, households are likely to experience higher real disposable income. This, in turn, should spur discretionary spending, which not only boosts consumption but also supports industry and employment. At the same time, simplification of the tax structure reduces compliance friction for businesses, contributing to an environment of greater stability and predictability.

This reform reflects a democratic approach to taxation that puts citizens first, prioritises affordability, and promotes social inclusion. By making the tax system simpler and fairer, the government has taken a bold step toward improving the quality of life for the Indian population. GST 2.0 overhaul is a historic milestone in India’s journey toward a more consumer-centric economy. It delivers immediate relief, strengthens household finances, and lays the foundation for long-term prosperity. For Indian households, this is far more than a policy update; it is a reaffirmation of their position in the nation’s economic vision.

As the festive season nears, GST 2025 reforms stand out as a timely and meaningful intervention, delivering not just fiscal relief but a broader sense of economic reassurance to Indian households. These measures go beyond technical adjustments; they represent a citizen-centric recalibration of the GST system, designed to ease the cost of living and enhance affordability across essential sectors such as food, housing, healthcare, and education. By aligning taxation more closely with the everyday needs of the populace, the reforms reaffirm the government’s commitment to inclusive growth and social equity.

(Jaising is Partner and National Indirect Tax Leader, Deloitte India. With inputs from Apoorva Yadav, Director, Deloitte India. Views are personal.)