The central government is considering a significant reduction in Goods and Services Tax (GST) on daily-use items like soap, toothpaste, readymade garments, ghee, and kitchen essentials—a move that could bring meaningful relief to millions of middle- and lower-income households. Discussions are underway to either reduce the 12% GST slab to 5% or do away with the 12% category entirely.
Common Goods May Get Cheaper
Essential household items currently taxed at 12% could soon see a price dip if the government shifts them into the 5% GST slab. Items under review reportedly include toothpaste, utensils, clothing, bicycles, and stationery—products integral to everyday living. The current tax structure places a considerable financial strain on consumers, particularly the economically weaker sections. A lower tax rate could reduce retail prices and bring relief to inflation-hit households.
Public Response: ‘A Small Change, A Big Relief’
Consumers have welcomed the potential cut. Priya Sharma, a schoolteacher from Delhi, commented, “If toothpaste and clothes become cheaper, it will really help. In a tight budget, even saving a rupee makes a difference.” Business owners also see benefits, as a simplified tax structure would reduce compliance burdens and improve affordability for customers.
GST Council to Take a Call Later This Month
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state finance ministers, is expected to discuss the proposal later this month. Although no official meeting notification has been released yet, sources indicate that internal negotiations are ongoing and a final decision is likely before the month ends.
Alignment with Budget 2024 Priorities
The timing of the proposed rate revision follows the Union Budget 2024–25, which focused on tax relief for middle-income groups. The GST revisions are being seen as a continuation of that focus. In addition to daily-use goods, the council may also consider reducing GST on items like pressure cookers, electric irons, small washing machines, footwear under ₹1,000, and certain agricultural tools and vaccines.
Revenue Concerns and Long-Term Benefits
While the proposal may cost the exchequer ₹40,000–₹50,000 crore in annual revenue, finance ministry officials believe the benefits will outweigh the losses in the long run. “It’s a calculated risk,” said a senior official. “Lower prices could stimulate demand, which may eventually increase GST collections.”
Experts note that such a measure may also help in curbing inflation by making essential items more affordable—particularly in rural and semi-urban areas, where consumers are highly price-sensitive.
A Track Record of Consumer-Friendly GST Reforms
This is not the first time the GST Council has acted to ease burdens on consumers. In previous meetings, tax reductions were approved on several items including cancer medications, ready-made snacks, and food products. In 2024, the 54th GST Council meeting reduced the tax on namkeens from 18% to 12%. However, the upcoming reforms could be the most impactful since GST was rolled out in 2017, aiming to both simplify tax rates and promote affordability.
Balancing Relief and Fiscal Discipline
As the nation awaits the outcome of the GST Council’s deliberations, the finance ministry faces the challenge of balancing consumer relief with fiscal prudence. For now, the possibility of more affordable household goods is sparking hope among millions of Indians trying to navigate rising living costs.
Whether the government proceeds with the tax cut will become clear in the days ahead, but the conversation has already stirred nationwide anticipation.