On August 15, 2025, during his Independence Day speech, prime minister Narendra Modi announced a significant GST exemption on several everyday items. The move was seen as a diwali gift to the public, aiming to ease the financial burden on common goods and provide relief to millions of households.

These changes have led to the removal of Goods and services Tax (GST) from various products, making them more affordable for the general public. But which items are GST-free, and how does this affect consumers? Let's take a closer look.

What is GST, and Why Was This Important?

GST, or Goods and services Tax, is a tax levied on most goods and services in India. Over the years, the GST council has revised tax rates on various items. Some items were previously taxed at high rates, and in certain cases, these rates were revised downward to ease the financial burden on the common man.

The recent announcement has brought about a significant reduction in the GST rate, or a complete GST exemption, on several essential items, including food products, stationery, and household items. The idea behind this change is to offer relief to consumers, especially those in the lower income brackets, during the upcoming festival season.

Key GST-Free Products

Let’s explore some of the items that are now GST-free, thanks to this new policy:

1. Pencil Sharpeners:

o These humble stationery items are now available without the added GST burden. A simple but significant change, especially for parents buying school supplies for their children.

2. Parathas and Khakhras:

o Traditional food items like parathas and khakhras, staples in many households, have also been exempted from GST. This will lower the cost of these everyday essentials, especially in regions where such foods are consumed frequently.

3. Fresh fruits and Vegetables:

o Several fresh fruits and vegetables were already exempt from GST. However, the government has now extended this benefit to more produce, ensuring that essential nutrition remains affordable.

4. Unbranded Food Items:

o Items like plain flour (atta), rice, and sugar that are unbranded and sold without any packaging will be GST-free. This is a win for households that rely on basic food staples.

5. Unbranded Household Items:

o Many essential household items like brooms, mops, and dustpans will now be available without GST, making them cheaper for the average consumer.

6. Certain Textiles and Fabrics:

o Cloth and textile products, particularly those that are unprocessed or locally produced, may see a reduction or exemption from the GST.

7. Medicines and health Supplies:

o Many basic health supplies, such as medicines, sanitary pads, and first-aid supplies, were already GST-free, and this trend continues, ensuring that public health remains a priority.

Why Was This Change Introduced?

1. Economic Relief:
The primary goal of this initiative is to provide financial relief to the common man, especially as india deals with the after-effects of the pandemic and inflation. With inflation pushing up the prices of many everyday goods, the government’s move to remove GST from essential items can help reduce living costs for families.

2. Boost to local Manufacturers:
The exemption of GST on unbranded, locally manufactured goods will likely give a significant boost to the local economy and small businesses. By making local goods more affordable, the government hopes to encourage consumers to buy Indian-made products, thereby contributing to the “Make in India” initiative.

3. Encouraging Consumption:
By removing the tax burden from staples and everyday items, the government hopes to encourage more consumption, which is critical for economic recovery. Lowering costs for basic necessities makes these items more accessible to a broader population.

4. Diwali Gift for the People:
The announcement was strategically timed ahead of Diwali, one of the most significant festivals in India. By making essential products more affordable during this time, the government aims to help families enjoy the festival without worrying about inflated prices.

How Will This Affect Consumers?

1. Lower Prices for Common Goods:
Consumers will now pay lower prices for many everyday items that are GST-free. This could have a significant impact on household budgets, especially for large families who buy these items in bulk.

2. Increase in Disposable Income:
With the removal of GST on several essential items, households will likely have more disposable income. This could lead to increased spending on other non-GST items, potentially boosting other sectors of the economy as well.

3. Enhanced Affordability:
The most significant benefit will be the enhanced affordability of essential items. From food to stationery and household items, consumers can now get more value for their money.

4. Market Changes for Retailers:
Retailers and businesses will have to adjust to these changes by re-pricing products and updating their billing systems. While the changes benefit consumers, businesses will also need to ensure they are passing on the benefits to their customers, without inflating prices.

What’s the Next Step?

For consumers, the key takeaway is that prices on many essential goods are now set to become more affordable. To make the most of these changes:

· Stay informed: Keep an eye on prices, especially during festive seasons, and ensure that businesses are passing on the benefits of GST exemption.

· Look for GST-Free Products: As this change continues to roll out, make sure to look for GST-free labels when shopping for essential items.

· Support local Businesses: With the exemption of GST on many unbranded local products, you have the opportunity to support small businesses while saving on taxes.

Conclusion

The GST exemption on a range of products, including pencil sharpeners, parathas, and khakhras, is a welcomed relief for consumers. This strategic move aims to boost economic recovery, provide financial relief, and reduce the burden of everyday costs, especially ahead of Diwali. By making essential items more affordable, the government is ensuring that households have access to basic goods without the extra tax load.

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.