The Central Government’s overhaul of the Goods and Services Tax (GST) system has been met with optimism in Hyderabad, where residents and traders say the changes will ease household budgets and simplify business compliance.

The reforms have slashed taxes on hundreds of consumer goods from soaps to small cars and streamlined the GST structure into two slabs of 5% and 18%, with zero tax on some items and 40% reserved for luxury and “sin” items.

Everyday relief

For many Hyderabadis, the cuts are already being translated into personal wins.

“This restructuring is a welcome and long-overdue change,” said Pavan Kumar, 27, an economics researcher from Moosarambagh.

“GST on a packet of aloo bhujia or a plate of rasmalai will now be 5% instead of 12%, which makes me very happy. Even for bigger purchases like ACs or small cars, affordability improves. If I construct a house, lower cement costs mean I can spend savings on beautifying it. Also, now with tax at 5% on rooms priced up to ₹7,500, I can extend my holiday budget a bit now thanks to cheaper rooms.”

Anita Rao, 40, a schoolteacher from Marredpally, echoed the sentiment. “I’ve been paying health insurance premiums for nearly a decade, and every renewal feels like a squeeze. Removing GST is a relief. It finally recognises that insurance is a necessity, not a luxury. That saving may not look huge on paper, but for families like mine it makes healthcare planning a lot more affordable.”

Families juggling childcare also welcomed the move. “Diapers, baby lotion, even biscuits were steadily eating into my monthly budget,” said Nithin Raj, 32, a marketing professional from RTC X roads. “Every rupee counts when raising a child. This drop on essentials is the first time in years I feel the system thought about parents.”

For small business owners, affordability translates into competitiveness.

“As someone who runs a salon, I’m constantly stocking up on personal care items like shampoos, soaps and skincare,” said Farah Begum, 29, of Bowenpally.

“With lower GST, I can keep services affordable and stay competitive in a market where clients are watching every rupee,” she added.

But not everyone saw it as unqualified relief. Rajasekhar P., an IT employee from KPHB, said, “Cutting GST on insurance and basic stuff people use every day makes sense, it shouldn’t have been taxed in the first place. With a recession coming and the U.S.  tariff effect hitting us, they’re cutting it now to give small businesses and regular people some relief. But this still doesn’t guarantee that common people won’t feel the effects of the recession.”

Traders cautious

“Though the new structure applies from September 22, updated MRP tags will take at least 2-3 weeks to reach us. Until then, we’ll sell at current rates. Demand won’t suddenly double – if a family buys 20 kilogram of flour, they won’t start buying 40kg just because it’s cheaper,” said Srinivas, who runs a general store in Ramanthapur.

Rekha, who manages a wholesale store nearby, noted that new consumer behaviour could strain supply chains.

“Wholesalers and retailers will have to ramp up production and transport, requiring fresh investment. Some items, like aerated drinks taxed at 40%, may see a drop in demand, but essentials and utilities will definitely pick up.”

For now, Hyderabad appears largely positive, with both households and shopkeepers seeing the reforms as a rare instance where tax policy touches everyday life. Yet, as traders warn, much depends on how quickly new prices reach shelves and whether businesses can adapt to shifting demand.

Published – September 05, 2025 12:20 am IST

The Goods and Services Tax (GST) Council, during its 56th meeting, decided to revamp the tax structure into a primarily two-rate system, as proposed by the Central government, Union Finance Minister Nirmala Sitharaman announced on Wednesday.

She added that the decisions would come into effect from September 22 for most items. Only tobacco and tobacco-related products will move to the new structure at a date to be specified by the Union Finance Minister.

Apart from the two rates of 5% and 18%, the new GST system would also include a 40% “special rate” on sin goods such as tobacco and luxury items such as large cars, yachts, and helicopters.

The government also calculated that the net fiscal implication of the rate cuts, based on consumption patterns in 2023-24, would be ₹48,000 crore. However, the officials clarified that the real implication would be known on the basis of current consumption, and that the rate rationalisation was expected to result in a buoyancy effect, and improved compliance.

“These reforms have been carried out with a focus on the common man,” Ms. Sitharaman said. “Every tax levied on the common man has gone through a rigorous looking into, and in most cases, the rates have come down. Labour-intensive industries have been given good support. Farmers and agriculture will benefit from the decisions. Health-related sectors will also benefit.”

Rate cuts for common man

She further said that common-use and middle-class items will see a reduction, with products such as hair oil, soap, shampoo, toothbrush, toothpaste, bicycle, table and kitchen ware, and other household articles being moved to 5% from either 18% or 12%.

The other items moving down to the 5% rate include namkeens, sauces, pasta, instant noodles, chocolates, coffee, and butter. Twelve specified bio-pesticides, bio-menthol, and labour-intensive items such as handicrafts, marble, travertine blocks, granite blocks, and intermediate leather goods would move from 12% to 5%.

Notably, cement will move from 28% to 18%.

The Finance Minister further explained that items such as ultra-high temperature milk, paneer, and all Indian bread, including rotis, chapatis, and parathas would see their tax rate fall to 0% from the earlier 5%.

Products such as air-conditioners, all TVs, dishwashers, small cars, and motorcycles of engine capacity less than or equal to 350cc would see their tax reduce from 28% to 18%. Buses, trucks and ambulances, as well as all auto parts, would also attract a GST rate of 18%.

The Finance Minister further said that 33 lifesaving drugs and medicines will move from 12% to 0%, while spectacles to correct vision would move from 28% to 5%.

Also read | Who are the members of the GST Council and what is their voting power?

Inversion rectified

“The long-pending inverted duty structure is being rectified for the manmade textile sector by reducing the GST rate on manmade fibre from 18% to 5% and manmade yarn from 12% to 5%,” Ms. Sitharaman said. “That will take care of every anomaly due to duty inversion in this sector.”

The inverted duty structure regarding the fertiliser will also be rectified, with the duty on sulphuric acid, nitric acid and ammonia being reduced from 18% to 5%.

The special rate of 40% will apply only on particular sin and super-luxury goods such as pan masala, cigarettes, gutka, chewable tobacco, zarda, unmanufactured tobacco and bidi, as well as goods including aerated water, caffeinated beverages, mid-size or large cars, motorcycles of engines exceeding 350 cc, helicopters and airplanes for personal use, and yachts or other vessels for private use.

On insurance services, individual life insurance policies and individual health policies will move to 0% from 18%.

Ms. Sitharaman further explained that the GST rate on pan masala, gutka, cigarettes, chewable and unmanufactured tobacco, and bidi would remain at 28%, in addition to a compensation cess, as currently in place.

Once the Centre discharges the loans it had borrowed to compensate States, these tobacco and tobacco-related items will move to the 40% slab. Ms. Sitharaman said the loan would likely be repaid within this calendar year.

Published – September 03, 2025 10:53 pm IST