The GST Council announced significant changes to the GST structure on September 3, set to take effect on September 22, 2025. These reforms are poised to bring substantial savings for the common man through
GST reduction.
To illustrate, let us a middle-class resident of Delhi earning Rs 50,000–60,000 per month and living in a rented house with two children. He would see noticeable savings in his monthly budget due to these changes.
Savings On Food Items
Under the new GST reforms, the tax on everyday items like paneer, ghee, namkeen, and packaged drinking water has been reduced from 12% or 18% to 5%. For instance, if a family spends Rs 5,000 per month on these items, the GST at the old rate (12%) was Rs 600, making the total expenditure Rs 5,600.
Now, with the reduced GST rate of 5%, the tax will be Rs 250, bringing the total expenditure to Rs 5,250. This results in a saving of Rs 350.
Savings On Clothes And Shoes
Previously, there was a 12% GST on clothes and shoes up to Rs 2,500, which has now been lowered to 5%. Suppose a family spends Rs 2,000 per month on children’s clothes and shoes. At the old rate (12%), the GST was Rs 240, making the total expenditure Rs 2,240.
Now, with the new GST rate of 5%, the tax will be Rs 100, and the total expenditure will be Rs 2,100, saving Rs 140.
Savings On Health And Life Insurance
Personal care products such as shampoo, toothpaste, and hair oil, which had an 18% GST, now have a reduced rate of 5%. If a family spends Rs 1,500 on these items, the GST at the old rate (18%) was Rs 270, making the total expenditure Rs 1,770.
With the new rate of 5%, the tax will be Rs 75, and the total expenditure will be Rs 1,575, saving Rs 195.
Additionally, the GST on health and life insurance premiums has been reduced from 18% to 0%. If a family pays Rs 2,000 per month for health insurance, the previous GST was Rs 360, making the total cost Rs 2,360.
With the new rate of 0%, the expenditure will be Rs 2,000, saving Rs 360.
Savings On Items Related To Children’s Studies
The GST on items related to children’s studies, such as pencils, notebooks, and books, has been eliminated, dropping from 12% or 5% to 0%. If a family spends Rs 1,000 on these items, the old GST rate (12%) was Rs 120, making the total expenditure Rs 1,120.
Now, with 0% GST, the expenditure will be Rs 1,000, saving Rs 120.
Monthly Savings Calculation
In total, the monthly savings for a middle-class family can be calculated as follows: Rs 350 (food items) + Rs 140 (clothes) + Rs 195 (personal care) + Rs 360 (insurance) + Rs 120 (study material), amounting to Rs 1,165 per month. Annually, this results in a saving of Rs 13,980.
If the family makes significant purchases, such as an AC (GST reduced from 28% to 18%) or a small car (GST reduced from 28% to 18%) during the festive season, the savings will be even greater. For instance, an AC worth Rs 30,000, which previously cost Rs 38,400 (28% GST), will now be available for Rs 35,400 (18% GST), saving Rs 3,000.
Therefore, with the new GST reforms, a middle-class family’s monthly savings can amount to approximately Rs 1,165, with additional benefits on larger purchases. This presents a substantial benefit from the government to the middle class ahead of Navratri and Diwali.
