GST 2.0 Explained: Everyday Goods Like Shoes, Clothes, and Essentials to Get Cheaper from September 22

GST 2.0: The Reform That Will Make Everyday Clothes and Shoes Cheaper (And What It Means for You) Everyday goods cheaper under GST 2.0

1. What is GST 2.0?

GST 2.0 is India’s sweeping reform of the Goods and Services Tax system, rolled out in September 2025. It replaces the existing four-slab tax structure with a simpler model based on two main rates—5% and 18%, plus a new 40% “sin and luxury” bracket. The aim? Streamline taxation, boost consumption, and rein in inflation.

Timing matters

These changes take effect from September 22, just in time for the Navratri and festive shopping season—an ideal moment for economic stimulus.

 

2. What’s Getting Cheaper—and Why It Matters

Your day-to-day essentials are about to cost less

A wide array of household items—soap, shampoo, toothpaste, kitchenware, and toothbrushes—move from 18% to the low 5% bracket.

Bread, butter, and more hit the zero GST sweet spot

Staples like UHT milk, paneer, chapati, and parathas are now GST-free. That’s food for thought for budgeting families.

Indulgences get a break too

Chocolate, jams, pastries, namkeen, and dry fruits—previously taxed at up to 18%—are now lumped into the 5% bracket. A treat without the tax pinch.

Shoes, clothes, and school essentials come under tax relief

Footwear and apparel priced up to ₹2,500 see a drop to 5% GST (down from 12%). Notebooks, pencils, maps, and other school supplies also enjoy tax relief.

DIY, home, and farming tools also benefit 

Items like fertilizers, drip irrigation tools, solar cookers, pressure cookers, and mixer-grinders—all fall into the 5% bracket, making farming and household routines more affordable.

More affordable healthcare

Critical items—life-saving drugs, surgical gear, oxygen cylinders—are now either tax-exempt or taxed at 5%, offering healthcare cost relief.

3. The Flip Side: What’s Getting Costlier GST tax changes India

Premium apparel takes a hit
Garments and footwear priced above ₹2,500 per item will now attract 18% GST, up from the old 12%.

Industry groups are worried
The Retailers Association of India (RAI) and Clothing Manufacturers Association of India (CMAI) warn this may hit the aspirational middle class, dampen retail demand, and impact traditional handloom and artisan segments.

Luxury and “sin” goods get a steep tax uplift
A new 40% tax slab is introduced for sin and luxury items like premium vehicles, yachts, and certain high-end consumer goods—designed to raise revenue and curb excess spending.

 

4. Economic Impact: Winners and Losers

Consumers win across the board
Lower tax rates on everything from food to clothing to fertility items could slash household bills by up to 1.1% of inflation, giving consumers some much-needed breathing room.

Exporters and artisans receive a boost
Handicrafts, hand‐embroidered goods, and traditional footwear now taxed at 5% bring optimism to cottage industries, especially ahead of festival season.

Auto, electronics, and appliance sectors on the rise 
Price drops in TVs, small cars, cement, and air conditioners are expected to stimulate festive-season demand and spur industrial growth.

But premium and fashion sectors reel
Global labels like Zara, Levi’s, Nike, and H&M may face lower demand as middle-class consumers pull back due to higher GST.

 

5. Voices from the Market

Industry asks for simplicity
RAI advocates for a flat GST rate across categories, to remove confusion and ease the load on retailers.

Not all economists are convinced
Prudent voices like economist Montek Ahluwalia suggest a single 14% rate might be more effective than multiple slabs, emphasizing simplicity and better revenue outcomes.

 

6. Your Spending, Simplified

Here’s a breakdown of what gets cheaper—and what gets costlier:

Category	Price Range	GST Old → New	Consumer Effect
Daily essentials & toiletries	Most price points	18% → 5%	Cheaper household goods
Staple food & bread (milk, paneer, roti)	Household essentials	5% → 0%	Lower grocery bills
Apparel & footwear ≤ ₹2,500	Budget clothing	12% → 5%	More affordable clothing
School & stationery	Books, maps, pencils	12% → 0%	Cheaper education supplies
Healthcare supplies	Lifesaving items	12/18% → 5% or 0%	Reduced medical costs
Premium garments & accessories	> ₹2,500	12% → 18%	Higher costs for branded goods
Luxury/sin items	High-end goods	28% → 40%	Expensive luxury experience

 

7. What You Can Do: Tips & Takeaways GST council meeting updates

• Smart shopping: Stock up on essentials now while they’re cheaper.
• Budget clothes wisely: Choose apparel under ₹2,500 to avoid tax hikes.
• Support local: Handloom and artisan products are now more competitively priced.
• Watch purchases: Postpone luxury buys—tax increases make them more expensive.

 

Final Word

GST 2.0 is a bold move to make everyday goods affordable and spur demand.
By reducing tax on essentials like food, toiletries, school supplies, and affordable apparel, the reforms provide relief to Indian households. Yet the higher tax on premium goods reflects the government's balancing act—promoting simplicity and spending power while protecting fiscal health through new sin and luxury levies.

Ultimately, this reform rewrites pricing dynamics in India—from kirana stores to high-street fashion. As consumers, retailers, and policymakers adjust, the long-term effectiveness of GST 2.0 will prove whether simplification truly meets sustainability.

 

Frequently Asked Questions (FAQs)

Q1: What is GST 2.0?
GST 2.0 is India’s new Goods and Services Tax reform that simplifies the tax structure into fewer slabs, making essentials like food, shoes, and clothes cheaper.

Q2: From when will the new GST rates apply?
The revised GST rates will come into effect from September 22, 2025, just ahead of the festive season.

Q3: Which goods are getting cheaper under GST 2.0?
Everyday goods like soap, toothpaste, shampoo, footwear below ₹2,500, budget clothing, school supplies, and some food items will now be taxed at 5% or 0%.

Q4: Will premium clothing and footwear also get cheaper?
No, clothes and shoes priced above ₹2,500 will actually become costlier as GST rises from 12% to 18%.

Q5: How does GST 2.0 affect household budgets?
Families can expect relief on daily essentials, groceries, and affordable apparel, which will bring down overall monthly expenses.

Q6: Are luxury goods included in GST 2.0 changes?
Yes. Luxury items and “sin goods” like premium cars, tobacco, and yachts now fall under a new 40% GST slab.

Q7: What does this mean for students and parents?
School essentials like books, notebooks, maps, pencils, and uniforms will get cheaper, easing education costs.

 Conclusion

GST 2.0 is a big relief for the common man in India. By cutting taxes on daily essentials, food, affordable clothing, shoes, school supplies, and household products, it puts more money back in the pockets of families. At the same time, it raises taxes on premium and luxury goods, balancing affordability with revenue needs.

This new GST structure will not only boost consumer demand during the festive season but also support local artisans, weavers, and small businesses by making their products more competitive. While high-end brands may feel the pinch, the broader economy and households stand to benefit.

In short, GST 2.0 is set to make life easier for everyday consumers while reshaping India’s retail and economic landscape.