GST Relief for Middle Class: Prices of School Kits, Medicines, Toiletries, and Essentials Set to Drop

In a big respite for middle-class consumers, the new Goods and Services Tax (GST) reforms kicked in on Monday, providing lower tax rates on a vast array of essential and non-essential products, ranging from food, cars, healthcare, personal care, to household items.

Essential items on a day-to-day basis such as soap, toothpaste, shampoo, hair oil, and tooth powder will now be charged only 5 per cent GST in place of the earlier 18 per cent, lightening the burden on family budgets. For instance, a Rs 5,000 bill on groceries and toiletries can now help consumers save around Rs 500.

With foodstuffs now taxed at 5 per cent or nil, a family with the middle-class Rs 8,000-10,000 monthly expenditure on groceries would save Rs 800-1,000 each month—over Rs 10,000 in a year. Everyday essentials like paneer, roti, and packed parotta will now be tax-free, while others like butter, ghee, cheese, chocolates, biscuits, and pickles have been shifted to the 5 per cent slab from earlier 12 or 18 per cent.

The reduction in GST on educational items is also likely to ease the financial burden on families. For example, a school kit of Rs 1,000 (notebooks, pencils, and crayons) will now be priced at Rs 850.

Also, GST on pharmaceuticals for uncommon diseases, diagnostic kits, laboratory equipment, and other medical supplies has been reduced to 5 per cent from 12 per cent. Cancer drugs are exempt from GST now, so a Rs 10,000 medicine that is taken every month could be reduced by Rs 500-1,200.

Domestic electronics will also experience price reductions: a television that used to cost Rs 40,000 is now Rs 4,000 lower, solar heaters that used to cost Rs 60,000 will be Rs 7,000 lower, and an air conditioner that cost Rs 35,000 is now Rs 3,500 lower.

The GST rationalisation also favors farmers as agricultural equipment is taxed lower, and artisans and entrepreneurs are about to benefit from the new framework.

Since the new indirect tax system—5, 18, and 40 per cent slabs—was introduced on the first day of the nine-day Navratri festival, Prime Minister Narendra Modi has termed the launch as a "GST Bachat Utsav."

"From tomorrow, you will be able to buy your favourite items with ease. This is like a GST saving festival for every Indian," the Prime Minister said while speaking to the nation on the eve of the new tax regime.

PM Modi also pointed out that the poor and the rising middle class would get double benefits from the GST rate reductions.