🚗 Planning to Buy a Car? Wait Until 22 September!

Celebrate GST 2.0 Like Diwali This Navratri – Know What Gets Cheaper and What Gets Costlier

India is undergoing a major change in its tax structure. The GST Council has approved “GST 2.0” on 3 September 2025, under which the existing four tax slabs (5%, 12%, 18%, 28%) will be replaced by two main slabs (5% and 18%) and a new 40% slab. This new structure will be effective from 22 September 2025. As a result, taxes on everyday items will go down while taxes on luxury and “sin goods” will increase.

✅ What Will Become Cheaper?

• Small Cars and Two-Wheelers:

Petrol cars up to 1200 cc, diesel cars up to 1500 cc, motorcycles up to 350 cc and auto-rickshaws will now be placed under the 18% GST slab instead of 28%. This means car and bike manufacturers will reduce prices after 22 September.

• Daily-use items:

Chocolates, hair oil, shampoos, soaps, toothpaste, biscuits and packaged mineral water have all been shifted from the 18% to the 5% GST slab. This will bring relief to household budgets.

• Milk and dairy products:

UHT milk, paneer, pre-packaged pizza bread, roti/chapati etc. will now fall under the zero or NIL GST category.

• Household essentials:

Butter, ghee, cheese, nuts, candles, tableware, handbags, umbrellas, sewing machines and similar goods will now be taxed at 5% instead of 12%.

• Health and life insurance:

Individual life and health insurance policies will now attract zero GST. Several life-saving medicines have also been moved into the NIL category.

• Agriculture and industry:

Tractor tyres, farm diesel engines, brakes, gearboxes and similar parts have moved from 18% to 5%. Khadi, jute and cotton bags, feeding bottles, tableware, sewing machines and bicycles will also become cheaper.

🚫 What Will Become Costlier?

• Large cars, SUVs and high-end motorcycles:

Petrol engines above 1200 cc, diesel engines above 1500 cc, cars longer than 4000 mm, motorcycles above 350 cc, large trucks and buses will now attract a 40% GST rate. If you are planning to buy a big SUV, it will be cheaper to purchase before 22 September.

• Non-alcoholic beverages:

Carbonated drinks, fruit-based beverages and caffeinated drinks will all move into the 40% GST slab.

• Sin goods and luxury items:

Pan masala, tobacco, cigarettes, lottery, gambling, yachts, private aircraft, revolvers/pistols and smoking pipes will now be taxed at 40%.

• Certain textiles and paper products:

Clothing items priced above ₹2,500 and some stationery/paper products will move from 12% to 18%.

💡 Why This Change?

GST 2.0 has been introduced to simplify the tax system, ease compliance and boost consumption. By lowering taxes on essential items and raising them on luxury and wasteful goods, the government aims to balance revenue with consumer welfare. From 22 September, most products will also see the consumption cess abolished, except for certain tobacco-related goods.

📢 Advice for Consumers

• Thinking of buying a small car or bike?

Prices will fall once the new rates are implemented, so waiting until 22 September is a smart choice.

• Planning for an SUV or large bike?

With tax rising to 40%, buying before 22 September may help you save.

• Household shopping:

Items like shampoos, soaps, chocolates, paneer, biscuits and mineral water will get cheaper, so you can benefit from waiting until after 22 September.

With GST 2.0, everyday living will become more affordable while luxury will become costlier. The new rates come into force this Navratri, so plan your purchases accordingly.

Written by Dr. Vinay Prakash Tiwari, Founder, Daddy’s International School & LTP Calculator Financial Technology Private Limited