Last updated: August 30, 2026
For a typical Indian household, GST 2.0 has come out net positive. Far more categories in an average monthly basket — packaged food, personal care, insurance, small appliances — moved to lower rates than moved higher. What did get costlier is concentrated in a narrow band of luxury and sin goods most households buy rarely, if at all.
What Got Cheaper
| Category | Old Rate | New Rate |
|---|---|---|
| Packaged food staples (biscuits, namkeen, processed snacks) | 12% | 5% |
| Personal care items (soaps, shampoo, toothpaste) | 18% | 5–18% depending on item, several moved down |
| Health insurance premiums | 18% | 0% (exempt) |
| Life insurance premiums | 18% | 0% (exempt) |
| Small household appliances | 28% | 18% |
| Mass-market two-wheelers and small cars | 28% | 18% |
| Life-saving and cancer medicines | 5–12% | 0% (exempt) |
What Got Costlier
| Category | Old Rate | New Rate |
|---|---|---|
| Tobacco and pan masala | 28% + cess (variable) | 40% flat |
| Aerated/carbonated drinks | 28% + cess | 40% |
| Luxury cars and premium SUVs | 28% + cess | 40% |
| Online gaming and betting | 28% (on entry amount, disputed basis) | 40% |
I go into more depth on exactly what falls into this top bracket in The 40% Club, if you want the full list.
What This Looks Like for a Typical Budget
Think about a middle-income household’s rough monthly spending pattern. The categories that dominate most budgets — groceries, personal care, utilities, insurance, the occasional appliance purchase — sit almost entirely in the “got cheaper or unchanged” column. The categories that got more expensive (tobacco, sugary drinks, luxury vehicles, gambling) are, for most households, either a small slice of spending or effectively zero.
For a household with limited or no spending on tobacco, luxury vehicles, or gambling, the combination of lower rates on packaged food, personal care, and appliances plus the insurance exemption tends to add up to a net reduction in the GST embedded in monthly spending — and that’s before even factoring in any price changes from unrelated things like input costs or general inflation.
Going Sector by Sector
Groceries and FMCG
Most packaged food that used to sit at 12% — biscuits, namkeen, ready-to-eat snacks, a lot of processed food generally — moved down to 5%. This is probably the broadest-reaching cut in GST 2.0, simply because packaged food is such a large, recurring share of what households spend money on.
Insurance
Health and life insurance premiums went from 18% to fully exempt. I’ve done the exact savings math separately in the insurance GST exemption guide if you want real numbers rather than percentages.
Consumer Electronics and Appliances
A lot of items that sat at the old 28% slab mostly for revenue reasons rather than genuine luxury status — refrigerators, washing machines, small kitchen appliances — moved down to 18%. That’s a real cut for anyone making a big-ticket household purchase.
Transportation
Mass-market vehicles moved from 28% down to 18%, while the luxury segment moved up to 40% — a clear split that widens the price gap between economy and premium vehicles rather than treating them the same way.
Healthcare
Beyond insurance, life-saving and cancer medicines moved to full exemption too, which I cover in more depth in the healthcare GST exemptions guide.
How to Check the Actual Impact on Your Own Budget
List out your major recurring spend categories — groceries, insurance, utilities, transport, healthcare — and check each one against the current GST slabs versus what you remember from before September 2025. The GST calculator is useful here for computing the tax difference on specific big-ticket purchases. And compare actual retail prices, not just tax rates — a rate cut only helps you if the retailer actually passes it through, which doesn’t always happen automatically.
Questions People Ask
Did prices actually fall, or just the tax rate?
It varies by retailer and product. A GST rate cut reduces the tax component of the price, but whether the full saving reaches the shelf price depends on whether the seller passes it through. Anti-profiteering provisions exist specifically to discourage sellers from just pocketing the rate-cut benefit themselves.
Are services cheaper under GST 2.0 too?
Mostly not — most services stayed at the standard 18% rate. The biggest service-side change was the insurance exemption. Goods saw far more rate movement overall than services did.
Will rates change again soon?
The GST Council keeps reviewing rates periodically. I’ve written up what might be coming next in the outlook on upcoming GST Council changes.
For most Indian households, GST 2.0 has quietly lowered the tax embedded in everyday spending — groceries, insurance, and appliances all moved in a favorable direction. What got more expensive is concentrated enough in a narrow set of categories that the overall effect, for the average household, leans genuinely positive. Run your own numbers on any specific purchase with the GST calculator.
Related reading: the GST 2.0 three-tier rate structure guide, the 40% Club on luxury goods, and zero tax on health & life insurance.