Cigarettes face 40% GST while life-saving drugs cut to 5% — What gets cheaper and costlier from September 22

New Delhi: The GST Council on Wednesday approved historical changes to India’s indirect tax system, introducing a simplified 5 per cent and 18 per cent tax structure. From September 22, several daily-use goods and services will become cheaper.

A broad basket — from groceries and fertilisers to footwear, textiles, and renewable energy — is set to benefit. Goods earlier taxed at 12 per cent and 28 per cent will now mostly shift to the new slabs, reducing costs.

Food and daily essentials

Ultra-high temperature (UHT) milk will now be tax-free, while condensed milk, butter, ghee, paneer, and cheese have moved from 12 per cent to 5 per cent or nil in some cases.

Staple items such as malt, starches, pasta, cornflakes, biscuits, chocolates, and cocoa products will drop from 12–18 per cent to 5 per cent. Dry fruits and nuts — almonds, pistachios, hazelnuts, cashews, and dates — earlier at 12 per cent, will now attract just 5 per cent.

Refined sugar, sugar syrups, toffees, and candy have been shifted to the 5 per cent slab. Vegetable oils, animal fats, edible spreads, sausages, meat preparations, fish products, and malt extract-based packaged foods have also been moved to 5 per cent.

Namkeens, bhujia, mixture, chabena and similar ready-to-consume packaged preparations (other than roasted gram) will fall from 18 per cent to 5 per cent. Waters, including mineral and aerated waters without added sugar or flavouring, will also drop from 18 per cent to 5 per cent.

Agriculture and fertilisers

Fertilisers will see a reduction from 12 per cent/18 per cent to 5 per cent. Select agricultural inputs, including seeds and crop nutrients, have been rationalised from 12 per cent to 5 per cent.

Healthcare

Life-saving drugs, health-related products, and certain medical devices will now attract 5 per cent or nil, reduced from 12 per cent/18 per cent.

Consumer goods

Entry-level and mass-use electrical appliances will move from 28 per cent to 18 per cent. Footwear and textiles will see a drop from 12 per cent to 5 per cent, lowering prices for mass-market products.

Sin and luxury goods stay costly

Pan masala, gutkha, cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and bidi will continue under high GST rates and compensation cess until cess-linked loans are cleared. Their valuation will now shift to Retail Sale Price (RSP) instead of transaction value, ensuring tighter compliance.

All goods containing added sugar, sweetening matter, or flavouring, including aerated waters, will move from 28 per cent to 40 per cent. A new 40 per cent slab has been introduced for sin and luxury goods, keeping cigarettes, premium liquor, and high-end cars under heavy taxation.

Imported armoured luxury sedans will be exempt only in special cases, such as those brought in by the President’s Secretariat.