From medicines to milk: Items that get cheaper after GST rate cuts from today

Starting today, changes in India’s Goods and Services Tax (GST) rates come into effect, following decisions by the GST Council. The revised structure reduces tax rates on several essential goods and services, aiming to simplify compliance and make products more affordable for consumers.

Here’s a closer look at the items that will cost less under the new GST regime:

Medicines and health products

Concessional GST on most medicines: While not fully exempt, many essential medicines remain taxed at a reduced 5% rate, ensuring affordability without disrupting manufacturers’ input tax credits.

Ultra High Temperature (UHT) dairy milk: GST exemption applies only to dairy UHT milk.

Plant-based milk drinks: Products such as soya milk, almond milk, and other plant-based milk drinks now attract just 5% GST, down from earlier rates of 12–18%.

Insurance products

Life insurance policies: All individual life insurance policies, including term plans, endowment policies, and ULIPs, are now exempt from GST. Reinsurance of such policies is also covered.

Health insurance policies: Individual health plans, including family floater and senior citizen plans, are fully exempt. Reinsurance is also exempted, though insurers cannot claim ITC on other input services like brokerage.

Personal care and household items

Shampoos and face powders: Common household personal care items now attract lower GST rates, making them cheaper for everyday consumers. This applies across brands, including premium or luxury options.

Transport services

Passenger road transport: Tax remains at 5% without input tax credit (ITC), though operators may opt for 18% with ITC.

Air travel: Economy class travel is taxed at 5%, while business and other premium classes remain at 18%.

Multimodal transport of goods: Tax varies between 5% (without air leg) and 18% (with air leg), with ITC treatment depending on the type of transport.

Food and beverages

Milk and plant-based drinks: As mentioned, UHT milk is exempt, while plant-based drinks now attract 5% GST, providing savings for families and consumers choosing alternative options.

Agricultural and technical products

Agricultural machinery: Remains taxable at a concessional rate to balance relief for farmers with manufacturers’ ability to claim input tax credits.

Technical textiles: Items like geotextiles and agro-textiles continue to be treated under textile classification, allowing faster processing of GST refunds on accumulated credits.

Other key points

GST on imported goods: Revised rates apply to imports, unless specifically exempted.

Stock and invoicing: Products already in the supply chain before September 22 can continue to be sold with revised GST rates reflected in invoices; no recall is required.

Input Tax Credit (ITC): Purchases made before the rate change retain full ITC eligibility, while supplies exempted under the new regime require reversal of related ITC.

The government has clarified that the objective of these cuts is to simplify the GST framework and ensure that essential goods and services become more affordable, without disrupting the input tax credit chain that supports manufacturers.

Catch LIVE updates on GST new rates here