Why GST Reform 2025 Makes This Festive Season Brighter For The Common Man And Farmers?

India’s indirect tax system has entered a new era and the GST Council, led by Finance Minister Nirmala Sitharaman, approved sweeping reforms to simplify tax slabs and provide relief to the common man. The new structure will take effect on September 22, 2025, just before the festive season while the reforms come as the economy faces slowing trade and a 50 per cent tariff on Indian exports by the United States. The government hopes this bold move will lift domestic consumption and shield vulnerable sectors.

Simplified GST Structure

The earlier four-tier GST slab of 5 per cent, 12 per cent, 18 per cent, and 28 per cent has been replaced. Now, India will operate with two standard rates of 5 per cent and 18 per cent. A special 40 per cent category will apply to luxury and sin goods. This streamlined structure will make taxes clearer and fairer.

Relief for Car Buyers

Car buyers will see major benefits. Small cars with petrol engines up to 1200 cc or diesel engines up to 1500 cc and under four metres in length will now attract only 18 per cent GST instead of 28 per cent. Popular models like Maruti Suzuki Alto, Swift, Fronx, Tata Punch, and Hyundai i10 will become more affordable. Larger and premium cars will fall under the 40 per cent bracket.

Household Savings on Essentials

The reform targets household relief. Frozen parathas, chapatis, paneer, khakhra, and pizza bread are now tax-free. UHT milk joins other dairy products in exemption. Plant-based and soya milk beverages will carry 5 per cent GST. Butter, ghee, jams, sauces, packaged namkeens, bhujia, biscuits, chocolates, dry fruits, and cereals will also move to the 5 per cent slab. Toiletries like shampoos, toothpaste, hair oils, and combs will cost less. Kitchenware, umbrellas, bamboo furniture, and bicycles will also fall under 5 per cent.

Festive Shopping Boost

Appliances such as air conditioners, refrigerators, washing machines, and large-screen televisions will now attract 18 per cent GST instead of 28 per cent and this cut will boost festive season buying and support retailers and manufacturers.

Support for Health and Insurance

Life and health insurance premiums are now GST-free. Policies such as term life, ULIP, and endowment will become more affordable. Over 30 specialised drugs, including cancer and rare disease treatments, will also carry no GST. Families will save more on healthcare and insurance.

Farmers Gain Strong Backing

Farmers will see reduced costs on tractors, parts, bio-pesticides, micronutrients, drip irrigation systems, and machines, all now taxed at 5 per cent. Prime Minister Narendra Modi reaffirmed his stand, promising never to compromise farmers’ interests despite global trade pressures.

Affordable Education for Students

Students will benefit from GST-free notebooks, pencils, crayons, sharpeners, maps, globes, pastels, and erasers. The move will lower education costs for families.

Impact on the Rich

Luxury cars will now fall under the 40 per cent bracket without extra cess, lowering prices slightly. Premium brands like Mercedes-Benz, BMW, JLR, and Audi may turn more competitive. Apparel above Rs 2,500 will attract 18 per cent GST, up from 12 per cent. Coal will now face 18 per cent GST, while fizzy drinks and tobacco remain at 40 per cent.

Economic Need for Reform

The United States imposed 50 per cent tariffs on $60.2 billion worth of Indian exports, hitting textiles, gems, seafood, and leather. Economists warn this could cut India’s GDP growth by up to 0.6 per cent. The GST reform aims to revive domestic demand and protect vulnerable communities.

Bigger Relief for the Middle Class

Income up to Rs 12.75 lakh annually will now be tax-free and combined with reduced GST, this policy strengthens middle-class purchasing power. Modi stressed that these reforms will benefit farmers, MSMEs, youth, and households. With elections near and global uncertainty ahead, the reforms mark a strong political and economic signal.