India has rolled out GST 2.0, a sweeping reform that simplifies the tax structure to just two slabs—5% and 18%. Prime Minister Narendra Modi hailed the move as a “festival of savings”, promising relief for households and a boost to business confidence.
Under the new regime, groceries, medicines, footwear, and other daily essentials will now attract 5% tax, while consumer electronics, cars, air travel, and luxury services are placed in the 18% bracket. The earlier 28% slab has been scrapped, with certain items like SUVs and tobacco still carrying sector-specific surcharges.
The government has positioned this as a big win for the middle class, but reactions are mixed. Households may see cheaper monthly grocery bills, yet aspirational purchases—from smartphones to refrigerators—will now cost more. Retailers and FMCG firms expect a festive demand surge, while auto and electronics makers fear sales could take a hit.
Economists warn of a subtle shift: while the reform simplifies compliance and improves transparency, it may transfer the burden from essentials to aspirational goods, forcing families to rethink spending. “It’s savings on one hand, but higher costs on lifestyle upgrades,” said Delhi-based economist Dr. Arvind Mehta.
With festivals around the corner, the true impact will soon be visible in consumer behavior. If people spend more freely, GST 2.0 could cement itself as a success story. If not, the so-called “festival of savings” may turn into a cautious recalibration of the middle-class budget.
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