GST 2.0: Major Tax Reforms Bring Relief on Food, Education, and Healthcare from September 22

New Delhi, National Desk – In a landmark decision aimed at providing relief to millions of Indian households, the Goods and Services Tax (GST) Council has announced sweeping changes to the country’s indirect tax structure. At its 56th meeting, chaired by Union Finance Minister Nirmala Sitharaman, the council approved a major overhaul of the GST rate system. The reforms, which come into effect from September 22, reduce the number of tax slabs to just two – 5% and 18%, replacing the earlier multi-tiered system.

This restructuring has not only simplified the tax regime but also brought several essential commodities and services under the zero-tax bracket, directly benefiting common citizens, students, farmers, and patients.

Everyday Food Items Now Tax-Free

For Indian households, kitchen expenses form a major part of the monthly budget. In what is being seen as a populist yet pragmatic move, the government has exempted several ready-to-eat and essential food items from GST altogether. Products like paneer, milk, roti, bread, and even pizza will now be sold tax-free.

This change is expected to provide direct relief to middle-class families struggling with rising food inflation, while also supporting the packaged food industry, which has been seeking a rationalization of tax rates. Ready-to-eat meals, which previously attracted higher GST, will now be more affordable, encouraging wider consumption and easing household burdens.

Education Sector Gets a Boost

Education-related products have also been brought under the zero-tax category, a move widely welcomed by parents, students, and educators. Items such as pencils, erasers, sharpeners, notebooks, and globes will now be GST-free.

The decision aligns with the government’s vision to make learning more affordable, particularly for school-going children in middle- and lower-income families. With the start of a new academic year, this step could translate into noticeable savings for households that often spend thousands annually on basic educational supplies.

Farmers and Agriculture Sector Benefit

Recognizing the importance of agriculture as the backbone of the Indian economy, the GST Council has eased the tax burden on farm equipment. The GST rate on tractors has been slashed from 12% to 5%, and parts of agricultural machinery will also benefit from lower rates.

For farmers, this reduction is more than symbolic—it lowers the cost of essential machinery, making farming slightly more affordable in an era of rising input costs. Experts believe this measure will not only support farmers but also stimulate demand in the rural economy, which has faced sluggish growth in recent years.

Healthcare and Insurance Relief

One of the most significant announcements came in the healthcare sector. The council has exempted 33 life-saving drugs from GST, ensuring critical treatments become more affordable. Medicines for cancer, rare diseases, and chronic conditions are likely to benefit from this exemption, providing relief to patients and their families.

Additionally, both health and life insurance policies will now be free from GST. The move is expected to encourage more people to buy insurance, improving overall healthcare coverage in India—a country where penetration of health insurance remains relatively low compared to global standards.

Household Products at Cheaper Rates

The tax rationalization also extends to several common household goods. Items such as bicycles, utensils, milk bottles, umbrellas, bamboo furniture, and combs will now attract a GST of 5% instead of 12%.

Personal care products, which are widely used across social strata, have also seen a steep reduction in tax rates. Products like shampoo, soap, hair oil, and face powder will now fall under the 5% tax bracket, down from 18%. This could significantly reduce the prices of popular consumer brands, benefiting urban as well as rural consumers.

What GST 2.0 Means for the Economy

The move to simplify GST slabs from five to two has been long anticipated. Since its implementation in 2017, GST has been criticized for being complex, with multiple slabs (0%, 5%, 12%, 18%, and 28%) often causing confusion for businesses and consumers alike.

By bringing most goods and services under either 5% or 18%, the government has attempted to create a simpler, more transparent system. Analysts suggest this could improve compliance, reduce disputes, and make the tax regime easier for small businesses to navigate.

While critics argue that the loss of revenue from tax exemptions could widen the fiscal deficit, the government appears confident that higher consumption and better compliance will balance out the shortfall. The decision also carries strong political undertones, as easing tax burdens on food, education, healthcare, and rural sectors directly appeals to the majority of the population.

Expert Reactions

Economists and policy experts have largely welcomed the reforms. “This is a people-centric GST reform. By cutting down the slabs and exempting essentials, the government has made a bold move to ease inflationary pressures,” said Dr. Arvind Gupta, a tax policy analyst.

Consumer groups also hailed the announcement. “Reducing GST on daily essentials and personal care products is a huge relief for ordinary citizens. It will improve affordability at a time when household budgets are under stress,” said Anjali Sharma, a consumer rights activist.

However, some industry voices remain cautious. The FMCG sector, for instance, expects a short-term hit to revenues due to lower tax incidence, though they hope demand will pick up in the medium term. Similarly, state governments may face revenue shortfalls, raising the question of compensation mechanisms.

The Road Ahead

GST 2.0 represents the most ambitious reform since the tax’s original rollout in 2017. By focusing on essentials and sectors that directly impact the common citizen, the government has positioned this move as both pro-people and pro-growth.

As the new rates come into force on September 22, the impact on household budgets, consumer demand, and overall economic growth will be closely monitored. If successful, the streamlined GST could mark a turning point in India’s taxation journey, making it not just simpler, but also more equitable.