CHENNAI: The 56th GST Council meeting, which began in New Delhi today, is deliberating one of the most significant overhauls of tax rates since the introduction of the Goods and Services Tax. On the first day of discussions, the Council took up proposals from its fitment committee that recommend moving many daily-use products and essential consumer goods into the lowest tax bracket. If approved, items such as toothpaste, shampoo, talcum powder and soaps, which are currently taxed at 18 percent, could soon attract only 5 percent GST. Similarly, butter, cheese and a wide range of ready-to-eat packaged foods including pickles, snacks and chutneys may also shift into the 5 percent slab from the present 12 to 18 percent.
Food and textile
This move is expected to extend to a broad range of food and textile products, consolidating nearly all of them under the 5 percent rate. For fast-moving consumer goods companies like Hindustan Unilever, Godrej Consumer and Nestlé India, the relief would be substantial. Lower taxes on their core products could reduce retail prices, ease inflationary pressures on households and encourage higher consumption. Industry analysts suggest that consumers may also see a reversal of “shrinkflation,” as companies would have greater room to restore earlier pack sizes without raising prices.
Consumer electronics
Equally notable is the proposal to reduce the tax burden on consumer electronics and construction materials. The 18 percent bracket, which until now covered a limited range of goods, is set to include televisions, air conditioners, refrigerators and washing machines, all of which have been taxed at the highest 28 percent slab. Cement, too, may move down to 18 percent from the current 28 percent. These cuts are expected to make white goods and home appliances significantly cheaper, especially ahead of the festive season when demand typically surges. The reduction in cement duties could also ease costs for the housing and infrastructure sectors, a longstanding demand of the real estate industry.
Benefit for households
For households, the direct impact would be visible both in grocery baskets and in big-ticket purchases. Essential items could see meaningful price drops at retail counters, while durable goods may become 8 to 10 percent cheaper as the reduction in tax flows through to price tags. Industry players believe this will provide a timely boost to consumption at a moment when buyers had already begun deferring purchases in anticipation of tax relief.
Fiscal realities
At the same time, the Council faces the challenge of balancing consumer relief with fiscal realities. Any reduction in rates inevitably raises concerns about the impact on GST collections for the Centre and states. Officials argue that simplified slabs and cheaper products could stimulate consumption volumes and, in turn, offset some of the revenue loss. The restructuring is also being justified as part of a broader effort to rationalise the complex system of multiple slabs into fewer categories, thereby reducing disputes and easing compliance.
Economists caution that implementation will need careful handling. Businesses will have to adjust billing systems, input tax credits and classification codes quickly once changes are notified. In the short term, sales of electronics and durables may temporarily slow as consumers wait for lower prices to take effect. Still, the broader impact is expected to be positive for both households and businesses.
The Council’s decisions on the proposals are likely to be announced at the conclusion of the two-day meeting. If approved, notifications will follow soon after, with the changes expected to take effect in time for the upcoming festive season. For Indian consumers, this could mean not just cheaper everyday goods but also more affordable appliances and housing materials, making this meeting a landmark moment in the evolution of GST policy.