GST Savings Explained: How Much Will Families Pocket Each Month After Rate Cuts?

New GST rates took effect on Monday, September 22, following the GST Council’s September 3 decision to cut taxes on a wide range of items, from cars to kitchenware. The move has already begun lowering prices, with the middle class standing out as the biggest beneficiaries. As shoppers adjust to the new rates, many are keen to know how much these changes will save them each month.

GST Cuts Boost Vehicle Affordability

Starting with vehicles, the festive season typically sees increased purchases of cars and bikes. The GST rates on cars, two-wheelers, and three-wheelers have been reduced from 28% to 18%, while the rate on bicycles has dropped from 12% to 5%. According to official data, a bike priced at Rs 1 lakh will now save buyers Rs 10,000.

Similarly, purchasing a car worth Rs 6 to

Rs 8 lakh will result in savings of Rs 60,000-Rs 80,000. For an auto-rickshaw priced at Rs 3 lakh, the savings will be Rs 30,000.

Additionally, the GST rate on vehicle parts has been reduced from 28% to 18%, lowering maintenance costs.

Savings On Daily Essentials

The GST rate on essentials such as soap, toothpaste, shampoo, hair oil, and tooth powder has been reduced to 5%. Diapers, baby bottles, kitchen utensils, sewing machines, matches, and candles have also become cheaper. A middle-class family that used to spend Rs 5,000 per month on these items will now save Rs 500 directly.

Discounts On Food Items

Food items have also seen GST reductions to 5%, affecting products like milk, cheese, butter, ghee, chocolate, biscuits, snacks, pasta, noodles, and juice. Consequently, a middle-class family spending Rs 8,000 to Rs 10,000 monthly on these items will save Rs 800 to Rs 1,000. Biscuits and chocolates are now 15% cheaper, and coconut water costs Rs 5 to Rs 6 less per litre.

Savings On Education And Healthcare

In terms of education and medical expenses, the tax on stationery items such as notebooks, maps, pencils, crayons, and cutters has been reduced from 12% to zero or 5%. A school kit previously costing Rs 1,000 will now be available for Rs 850, benefiting 43 million schoolchildren in Uttar Pradesh alone.

The GST on essential medicines has dropped from 12% to 5%, with medicines for rare diseases and cancer now tax-free. Test kits and medical supplies are now in the 5% slab, and eyeglasses have seen a reduction from 18% to 5%. Medicines worth Rs 1,000 will now cost Rs 70 to Rs 100 less.

Savings On Home Construction

House construction costs will also decrease as the GST on cement has been reduced from 28% to 18%, benefiting both rural and urban builders. A house previously costing Rs 50,000 in cement will now save Rs 5,000.

The GST on marble, granite, bamboo, and other wooden materials has also been lowered, making these materials more affordable. For a house worth Rs 50 lakh, this translates to savings of Rs 3 to Rs 4 lakh.

Savings On Electronics And Home Appliances

Lastly, electronic goods and home appliances have become cheaper. The GST on 32-inch TVs, ACs, dishwashers, and monitors has been reduced from 28% to 18%. A TV priced at Rs 40,000 will now be Rs 4,000 cheaper, and a Rs 35,000 AC will save Rs 3,500.

A Rs 60,000 solar water heater with a 5% GST will result in direct savings of Rs 7,000, making electronics purchases this Diwali more affordable.