ACs to Cars: Full List of What Gets Cheaper as New GST Rates

India is witnessing one of the most significant tax reforms since the launch of GST in 2017. Starting Monday, September 22, 2025, the government’s GST 2.0 reform comes into effect — slashing GST rates on several essential goods and popular consumer items. From air conditioners to cars, soaps to shampoos, medicines to insurance, the new tax structure is designed to make everyday living more affordable while boosting consumption and economic activity.

If you’re planning to make a big purchase or simply curious about what’s becoming cheaper, here’s the full list of goods and services that will now attract lower GST rates.

Why GST Rates Are Being Reduced

The new GST reform aims to simplify the earlier complicated four-slab system (5%, 12%, 18%, 28% + cess). Under GST 2.0, most goods and services will now fall under just two main slabs – 5% and 18%.

This rationalisation will:

Lower the tax burden on middle-class households.
Boost demand for vehicles, consumer durables, and FMCG goods.
Support businesses by reducing compliance complexities.
Replace multiple cesses with a single top rate of 40% — applicable only on luxury and sin goods (like tobacco, aerated drinks, and luxury cars).

What Gets Cheaper from Monday

Here’s a detailed category-wise breakdown of items that will now cost less:

🚗 Automobiles and Auto Components

Small Cars & Hatchbacks – Models like Maruti Alto, Swift, Wagon R, Tata Tiago, Renault Kwid.
Two-Wheelers – Scooters and bikes up to 350cc get cheaper by ₹7,000–₹18,000.
Commercial Vehicles – Trucks, buses, ambulances, and electric vehicles see lower prices.
Auto Components – Spare parts and tyres now attract 18% GST (earlier 28%).

💡 Impact: Automakers like Maruti Suzuki and Renault have already announced price cuts up to ₹1.2 lakh on select models.

❄️ Consumer Durables & Electronics

Air Conditioners & Refrigerators
Televisions (all screen sizes)
Washing Machines, Dishwashers, Kitchen Appliances

💡 Impact: These appliances drop from 28% to 18% GST, making home upgrades much more affordable ahead of the festive season.

🛒 FMCG & Daily Essentials

Soaps, Shampoos, Toothpaste, Hair Oil
Packaged Foods like namkeen, sauces, ketchup, ice cream, bakery items
Dairy Products – Butter, ghee, cheese
Dry Fruits and Snacks

💡 Impact: Most of these items are moving from 12–18% GST down to 5%, leading to visible price cuts at retail stores.

💊 Healthcare & Medicines

Life-Saving Drugs & Medical Devices – Reduced to 5% or fully exempt.
Diagnostic Kits & Corrective Spectacles – Lower GST will benefit patients.

🏠 Construction & Agriculture

Cement & Building Materials – Now taxed at 18% (down from 28%).
Agricultural Equipment – Tractors, irrigation tools, fertilizers, and farm machinery now cheaper.

🏨 Services Sector

Hotels & Lodging – Budget hotel rooms get GST cuts.
Salon, Spa & Gym Services – Now taxed at just 5%.
Insurance Premiums – Health and life insurance premiums get lower GST, reducing overall cost.

What Will Still Be Expensive

While most items get relief, some continue to be taxed at the highest 40% slab, such as:

Luxury Cars, SUVs & Superbikes (>350cc)
Tobacco, Cigarettes, Pan Masala, Gutkha
Sugary & Aerated Beverages
Private Yachts, Aircraft, High-End Luxury Goods

How Consumers Should Prepare

Check New Price Lists: Dealers and retailers are expected to revise MRPs immediately.
Compare & Shop: If you’ve been delaying a car, AC, or appliance purchase — this is the right time.
Monitor Bills: Ensure the GST charged on invoices matches the new reduced rates.

Final Thoughts

The latest GST reform is a big win for consumers and businesses alike. By bringing down rates on goods from ACs to cars, the government has not only simplified the tax structure but also provided a direct boost to purchasing power.

Whether you are buying a small car, upgrading your home appliances, stocking up on groceries, or paying for insurance — you are likely to save more from this week onward. This reform is expected to drive higher consumption, benefit manufacturers, and support India’s economic growth in 2025–26.