GST rate cut: How much will a common man save from tax reforms?
Check details on how much a common man save from the GST tax reforms implemented by the Central government's GST Council. Here's what a tax expert said…
GST rate cut: The Indian government's GST Council announced on 3 September 2025 that the nation's goods and services tax (GST) structure will change to a ‘two-tier’ system. These GST reforms were implemented on Monday, 22 September 2025.
Under the updated GST regime, goods sold in the nation will be subject to two tax rates of 5% and 18%, compared to the earlier multi-level tax structure. Effective today, the people of the nation will witness price cuts in multiple products sold as the government has put many items under the lower tax rate.
Amid the talks related to the impact of the GST cuts on the companies and the commodity prices, the question arises of how much the common man will save from this central government initiative.
How much will a common man save?
Industry veteran and Partner at Ernst & Young (EY), Saurabh Agarwal, in a social media post on the platform X, shared how the price cuts on daily essential items in the Indian economy are expected to save an individual earning a middle-class salary ₹1,275 per month.
Saurabh Agarwal highlighted that a person earning ₹50,000 per month is expected to save nearly ₹1,275 per month due to the GST rate rationalisation on daily essentials like food items, medical bills, etc.
“The price cuts on daily essentials (from food to medical bills) are expected to save a person earning ₹50,000 monthly approximately ₹1,275 a month—an effective 2.55% increase in disposable income,” said Agarwal, focusing on the tax cuts bringing a boost for every Indian family.
Through this tax cut, the common man is also expected to record a 2.55% increase in their disposable income, which is also expected to increase their spending power in the economy.
“This increased spending power acts as a crucial buffer, insulating our economy from global uncertainties,” said the tax expert.
Things getting cheaper and expensive
Mint reported earlier that as many as 375 items, including automobiles, electronics, equipment, kitchen staples and medicines, are set to get cheaper for the people of the nation after the central government's GST cuts.
These items include milk, coffee, condensed milk, biscuits, butter, cereals, corn flakes, drinking water packed in 20-litre bottles, dry fruits, after-shave lotion, face cream, face powder, etc.
Electronic items like air conditioners (ACs), dishwashers, televisions (TVs), and washing machines will also experience a price cut effective Monday, 22 September 2025.
On the other hand, sin goods like Pan masala, gutka, tobacco products, tobacco substitute, cigarettes, are among those items which will attract a special tax rate of 40% GST.
Luxury cars above an engine capacity of 1,200cc and a length exceeding 4 metres, above 350cc two-wheelers, Soft drinks and other non-alcoholic beverages, will also witness a sharp GST hike to 40% level under the newly revamped tax system.