The Indian government has declared a major reform in GST, intended at reducing tax rates on most of the daily essentials to 5%. The new GST reform offers much-needed financial relief to the Indian households. This was announced by Prime Minister Narendra Modi on August 15, 2025. It targets our regular food related items like pulses, edible oils, packaged foods, and other commonly purchased grocery items.
Ease to Middle and Lower Income Family
With inflation putting a continuous pressure on household budgets in one way or the other, this GST rate cut could decrease monthly grocery expenses for millions of families, mainly the families who are in the middle- and lower-income groups.
Experts note that reducing GST rates will straight forward eases the day-to-day financial problem that consumers face, thus increasing their disposable income and savings. This change comes at a very strategic point of time, possibly enhancing consumer spending during the Diwali festive season, a critical period for retail sales and consumption in India.
The reform also suggests removing the 12% and 28% GST slabs for most of the goods, simplifying the tax format to largely 5% and 18%.
Decreasing Operational Cost in Businesses
This new reform is expected to drop down operational costs for various businesses across the country. It could further lead to the reduction in product cost that reaches to the end consumer.
Therefore, making essential more affordable to the general public.
The purpose of the government behind this GST tax reform is to stimulate the consumption patterns across segments and enhance the overall financial wellbeing of households. Lowering the cost prices may directly empower consumers to manage their monthly budget in a better way.
Enabling Indian households to save money
Consequently, they may assign their financial resources to other streams and priorities such as education, healthcare, and savings.
The new GST rate cut also indicates a substantial policy shift, an effort to stabilize prices along with the empowerment of average Indian household consumer with tangible financial benefits. GoI is trying to strengthen their commitment to ease the cost of living along with supporting country’s economic growth.
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Ankur Mishra is a journalist who covers an extensive range of news, from business, stock markets, IPOs to geopolitics, world affairs, international crises, and general news. With over a decade of experience in the business domain, Ankur has been associated with some of the reputed media brands. Through a sharp eye on global marketplaces along with deep insights and analysis of business strategies, Ankur brings simplicity to the complex economic matrix to decode market trends and empower people.
He is committed to entrenched data, facts, research, solutions, and a dedication to value-based journalism. He has covered trade tariff wars, international alliances, corporate policies, government initiatives, regulatory developments, along with micro- and macroeconomic shifts impacting global fiscal dynamics.
