Household kitchens are set for relief as the GST Council has rolled out sweeping tax cuts on everyday food items.

Approved at its September 3 meeting, chaired by Finance Minister Nirmala Sitharaman, in New Delhi, the new structure reduces or removes GST on several staples, becoming one big announcement of GST 2.0, what may be called the biggest reset of the indirect tax system since its 2017 launch.

The move comes at a time when inflation is already cooling— headline retail inflation fell to 1.55% in July, the lowest since June 2017, while food inflation slipped into negative territory at –1.76%, its lowest level since January 2019.

What’s cheaper in your kitchen and meals after GST 2.0

Ultra-High Temperature (UHT) milk, paneer, pizza bread, rotis and khakhras will now attract zero tax, down from 5%. Parathas and parottas, which earlier drew 18%, also move to the nil bracket.

Key dairy items such as butter, ghee and cheese have seen GST drop from 12% to 5%. Condensed milk and an array of packaged foods including jams, sauces, pickles and fruit juices will also cost less.

Also Read: GST 2.0 gets the green light; what gets cheaper and costlier from September 22?

Dry fruits and nuts, almonds, cashews, pistachios and dates, shift to the 5% slab from 12%, while biscuits, cakes, chocolates, cornflakes, soups and ice cream now draw 5% instead of 18%.

Impact on households
The relief is significant for families who saw home-cooked meal costs fluctuate for a few months early this year due to swings in vegetable prices. With food inflation now firmly negative and GST cuts kicking in, the cost of preparing daily meals is expected to ease further.

Also Read: GST Council slashes tax slabs to two to spur consumption; announces key measures for middle class

GST 2.0: A demand stimulus? What the industry said
Packaged food makers are preparing to pass on the benefit quickly. Executives say grammage in Rs 5 and Rs 10 packs, reduced in recent years due to rising input costs, will be restored. Brokerages view this as a direct boost to consumption, which already rose 7% in the June quarter on the back of stronger rural demand.

The twin factors of declining inflation and reduced indirect taxes are expected to free up household budgets, reinforcing India’s consumption-led growth engine at a time of external trade headwinds.

Brokerages see the tax cuts as a strong consumption stimulus. “A lower tax on these (everyday essentials including packaged foods, personal care and ayurveda) products can help improve demand at a time when the consumer sector has been facing a moderate growth trend,” Jefferies said in a note before the announcement.

Nomura expected snack makers to be among the biggest beneficiaries, with GST on such products likely to fall to 5% from 12%. “Companies would look to pass more value to their customers through higher volume for relevant categories or lower price points,” said Krishna Khatwani, head of sales, Godrej Consumer Products before the big juggle.