GST Rate Cut: Will clothes get cheaper or expensive from today after GST 2.0?
Indian taxpayers will see a new GST 2.0 structure with two primary slabs of 5% and 18%. Ultra-luxury items will be taxed at 40%, while tobacco remains at 28%. PM Modi highlighted the reforms as crucial for economic growth and urged support for indigenous products.
Indian taxpayers will experience a shift in the Goods and Services Tax (GST) structure, as the revamped GST 2.0 comes into force. The new system simplifies the tax regime with just two primary slabs- 5% and 18%, covering the majority of goods and services.
Ultra-luxury items will now be taxed at 40%, while tobacco and related products will remain under the 28% slab plus cess.
Speaking on Sunday, Prime Minister Narendra Modi described the reforms as a major milestone for “Aatmanirbhar Bharat”, emphasising that it will accelerate India's economic growth.
He urged citizens to support ‘swadeshi’ (indigenous) products, linking them to national prosperity. “A GST bachat utsav (savings festival) will begin tomorrow. You'll be able to buy the things you like more easily,” PM Modi said, adding that the changes would benefit the poor, middle class, youth, farmers, women, traders, and shopkeepers alike.
Will clothes get cheaper or expensive from today after GST 2.0?
The new GST rates, first announced by Union Finance Minister Nirmala Sitharaman earlier this month, reduce the tax slabs to two broad rates - 5% and 18%.
While most items under GST have seen rate cuts, some limited items will now also be dearer with higher tax rates. Clothes priced above ₹2,500 will now attract a higher GST rate of 18% compared to 12% before.
How much GST on electric appliances?
Under the updated GST system, several high-value electronic appliances that were previously taxed at 28% have now been moved to the 18% bracket. Items such as televisions, refrigerators, dishwashers, and washing machines are now eligible for this lower rate, potentially reducing overall household expenses and making appliances more accessible, particularly for middle-class consumers.
What is the GST rate for air conditioners and dishwashers?
Air conditioners and dishwashers, which were earlier taxed at 28%, will now fall under the 18% GST slab. According to industry estimates, this change could result in average savings of ₹1,500 to ₹2,500 per unit, depending on the model and brand.
The price drop is expected to boost sales, especially with the festive season approaching—a time when demand for home appliances traditionally spikes.
What is the GST on smartphones and laptops?
In contrast, smartphones and laptops will see no change in pricing under the new GST system. The government has decided to maintain the existing 18% GST rate for both categories. As a result, consumers should not expect price cuts for mobile phones or laptops in the near term, as no tax relief has been announced for these items.
The introduction of the new two-slab GST structure marks the most significant tax rationalisation since the Goods and Services Tax was first implemented in July 2017, which initially featured four slabs: 5%, 12%, 18%, and 28%.
Under the updated system, only two main slabs, 5% and 18%, will apply to most goods and services. Ultra-luxury items and sin goods remain in higher tax brackets.
Policymakers say this simplified framework will make the tax system more efficient, transparent, and consumer-friendly, staying true to the original GST vision of promoting affordability and broader consumption.
The timing of the reform is also politically significant. Just weeks earlier, Prime Minister Narendra Modi had promised a “Diwali gift” in the form of GST reforms during his Independence Day speech. The GST Council’s decision now fulfils that pledge, setting the stage for a consumption-driven economic boost as the festive season kicks off.
(With inputs from agencies)