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From September 22, 2025, India is set to witness a major indirect tax reform and financial relief for many, with the launch of GST Bachat Utsav. Announced by Prime Minister Narendra Modi, the new GST regime promises lower tax rates for many goods and services, simpler structure, and broader benefits—especially for households, farmers, traders, and small businesses.
What is GST Bachat Utsav?
“GST Bachat Utsav” literally translates to a “festival of GST savings.” The government is calling the reforms part of this savings festival:
- It coincides with Navratri, starting September 22.
- The aim is to reduce tax burdens, make goods & services more affordable, simplify the GST system, and boost consumption and production.
- The reforms are part of GST 2.0, a next-generation GST framework to replace the older, more complicated multiple slabs.
What’s Changing? Key Reforms & Slab Structure
Here are the main changes under the new GST regime:
| Old System | New System (from Sept 22) |
| Four GST slabs | Two regular slabs: 5% and 18% for most goods/services, plus a separate higher‐rate slab (~40%) for luxury & sin goods. |
Some of the specific examples:
- FMCG & dairy: Items like milk, butter, ghee, paneer, cheese, ice-cream, snacks, frozen foods now fall under the 5% slab. For instance, 100 g Amul butter drops from ₹62 to ₹58, UHT milk from ₹77 to ₹75 per liter.
- Automobiles: Two-wheelers up to 350cc, small cars, and auto parts move from 28% to 18%, lowering costs of ownership. Tractors under 1,800 cc taxed at 5% (from 12%).
- Construction & housing: Cement, essential building materials like granite blocks, marble, sand-lime bricks get moved to lower slabs—some to 5%, others to 18%.
- Healthcare, farm equipment, etc.: Farm tools like harvesters, drip irrigation, and many essential medicines are being given relief.
Who Stands to Benefit?
The reforms under GST Bachat Utsav are expected to help:
- Consumers, particularly from poor, middle, and neo-middle classes, who will see price reductions in everyday goods.
- Farmers, especially via cheaper farm equipment and inputs.
- Small traders, businesses, entrepreneurs, due to simpler tax slabs, fewer compliance burdens, and lower rates on many goods or inputs.
- FMCG, dairy, auto, construction, renewable energy sectors among others, which will experience lower tax costs, potentially lower logistics & production costs too.
Potential Impacts
- Lower cost of living: Price drops in many essential & semi-essential goods (milk, butter, construction materials, etc.) likely to ease household budgets.
- Boost to consumption: With goods becoming more affordable, consumer demand may increase.
- Stimulus to manufacturing & investment: Reduced tax rates can lower input costs, making production more profitable; may attract investment in sectors that had high GST burdens before.
- MSME boost & job creation: Easier tax structure might encourage smaller businesses and entrepreneurs to scale up operations.
What to Watch Out For / Challenges
- Businesses will need to adapt quickly: accounting systems, tax compliances, invoice adjustments, etc. The rate changes must be implemented properly.
- Possible transitional issues: stock procured under old rates; pricing labels, public awareness.
- Some goods or services may remain expensive (luxury, sin goods) under the higher special slab. So, savings won’t be uniform.
- Risk of confusion during initial period: consumers / traders may be unclear about which items are under which new slab, leading to price disputes or delays.
What the Government Says
- PM Modi termed this as one of the biggest indirect tax reforms since 2017
- Reform approved in the 56th meeting of the GST Council.
- Emphasis on inclusive benefit: all citizens — women, youth, farmers, traders, entrepreneurs — to gain from this reform.
What Should You Do?
If you’re a consumer:
- Keep an eye on price changes for everyday items.
- Be aware of packaging or labelling; ensure reduced GST is passed on to you.
If you’re a business / trader:
- Update your billing/invoice software to reflect new GST rates.
- Revisit pricing of products, especially those moving from higher to lower GST slabs.
- Inform customers about savings & rate changes — transparency helps.
- Monitor cash flow impacts — while inputs may cost less, transitional inventory or contracts under old rates might influence margins temporarily.
Conclusion
GST Bachat Utsav marks a significant shift in India’s GST regime: simplifying slabs, easing tax burdens, and making many goods more affordable. If implemented well, it has the potential to reduce costs for consumers, simplify compliance with businesses, and inject fresh momentum into various sectors. It’s a festival of cost relief and tax reform — and one that many in the country are likely to welcome.
FAQs
Q1. What is the new GST slab structure under GST Bachat Utsav?
Under the update effective September 22, 2025: two main regular slabs – 5% and 18% for most goods/services. Luxury/sin goods remain taxed at a ~40% slab.
Q2. Does this mean all goods become cheaper?
No. Only goods/services moving from higher GST slabs to lower ones will see price drops. Luxury and sin goods remain at high rates. The actual price change depends on how much GST is a part of the final cost.
Q3. For businesses, what transition tasks are important?
- Updating accounting/invoicing systems for new GST rates.
- Checking existing stock/inputs bought under old rate.
- Adjusting pricing strategies.
- Ensuring compliance to avoid mischarging.
Q4. Will this reform affect Input Tax Credit (ITC) claims?
The article does not go into deep detail about ITC changes specifically. But with simpler slabs and fewer categories, it may reduce mismatches or compliance friction. Businesses should check specific notifications related to ITC.
Q5. How does this affect poor and middle-class households?
Because many essential goods (food, dairy, everyday groceries) will now be in lower GST slabs (5%), households should see some relief in their grocery bills. Also, reduced costs in construction or equipment (for farming, etc.) likely aids rural and middle-income segments.
Q6. Are there any sectors that will still pay more?
Yes — luxury goods, sin items (like tobacco, high-end vehicles beyond certain limits, etc.) will still be taxed heavily under ~40% slab plus possible cesses. Also, some goods may not see significant savings if GST was not the main cost component.
