For most Indian families, monthly expenses are built around the basics, groceries, medicines, farm supplies, and household items. Any change in tax rates on these essentials has a direct effect on how much money you can save.
With the introduction of GST 2.0 in September 2025, the government has simplified tax slabs and placed many daily-use essentials under the 5% GST slab. This is good news for the middle class, because it means your kitchen budget, healthcare expenses, and agricultural needs are now more affordable.
Think of the 5% GST slab as the government’s way of saying: “We’ll tax luxury, but protect your necessities.”
What Does 5% GST Slab Mean?
The 5% GST slab is the lowest positive rate of GST (apart from zero-rated items) that applies to goods and services considered essential for daily life. It is designed to:
- ✅ Reduce the tax burden on essential goods.
- ✅ Make basic healthcare and food affordable for everyone.
- ✅ Support farmers and small households by lowering costs on agriculture-related items.
In simple terms, if a product falls under the 5% GST slab, it means that when you buy it, you only pay 5% extra tax on its price, not 12% or 18% like before.
Example:
- If a 10kg packet of rice costs ₹500, earlier it could be taxed at 12% = ₹560.
- Now, under the 5% GST slab, it would cost ₹525.
- That’s a direct saving of ₹35, and when you multiply this across a monthly grocery list, the savings add up.
List of Goods Covered Under 5% GST Slab in 2025
Under GST 2.0, the government has placed a wide range of essentials in the 5% slab to ensure affordability for households, farmers, and patients. Here’s the updated list:
🛒 Food & Groceries
- Packaged food staples like rice, wheat flour (atta), pulses (dal), and edible oils
- Sugar, jaggery, and salt (packaged)
- Butter, ghee, and cheese
- Tea, coffee, and spices (unbranded or basic packaged)
- Frozen vegetables and processed foods that are not luxury items
- Biscuits and bread (basic variants, not premium/confectionary)
💊 Medicines & Healthcare
- Essential medicines (like those for fever, pain relief, blood pressure, diabetes)
- Vaccines and life-saving drugs
- Medical devices such as syringes, diagnostic kits, stents, and wheelchairs
- Ayurvedic and homeopathic medicines (standard variants)
🌾 Agricultural Goods & Equipment
- Fertilisers and pesticides used by farmers
- Agricultural machinery such as threshers, water pumps, and irrigation equipment
- Seeds and saplings for cultivation
- Organic manure and compost
- Tractors (below a certain horsepower range)
🏠 Household Essentials
- LPG for domestic use (subsidised)
- Coal (for small-scale domestic/commercial use)
- Handloom products and simple garments
- Footwear priced below ₹1000
- Sanitary napkins and hygiene products
📚 Education & Books
- Printed books and exercise books
- Educational kits and materials (non-digital)
- Braille books and related aids
🚌 Transport & Public Welfare
- Public transport services (non-AC buses, metro, suburban rail)
- Railway tickets (second class and sleeper class)
- Small-scale services in rural areas (like agricultural support services)
👉 This comprehensive 5% GST list highlights how GST 2.0 is protecting essentials while leaving higher tax rates for luxury items. It’s designed to ease pressure on middle-class households and support farmers and healthcare access.
Essentials Under 5% GST vs Non-Essentials Under 18% GST (2025)
| Category | Items under 5% GST (Essentials) | Items under 18% GST (Non-Essentials/Standard Goods) |
| Food & Groceries | Rice, wheat flour (atta), pulses, edible oils, sugar, jaggery, bread, frozen vegetables | Packaged snacks, branded biscuits, chocolates, soft drinks |
| Healthcare | Essential medicines, vaccines, syringes, stents, wheelchairs | Premium supplements, protein powders, cosmetic products |
| Agriculture | Fertilisers, seeds, irrigation pumps, basic tractors | Advanced agri-tech machinery, branded pesticides |
| Household Items | LPG cylinders (domestic use), sanitary products, footwear under ₹1,000, handloom garments | Branded cosmetics, footwear above ₹1,000, designer apparel |
| Education | Printed books, exercise books, Braille materials | E-learning subscriptions, digital content apps |
| Transport | Public transport (metro, non-AC buses, sleeper train tickets) | AC train tickets, air travel (economy under 18%, business higher) |
👉 Quick takeaway:
- If it’s part of your everyday living (food, healthcare, farming, education, basic travel), it’s in the 5% slab.
- If it’s a lifestyle choice (snacks, cosmetics, premium services), it’s in the 18% slab.
Sample Monthly Savings for a Family of Four Under 5% GST Slab
| Expense Category | Average Monthly Spend (₹) | Earlier GST (12%) | Now GST (5%) | Monthly Savings (₹) | Annual Savings (₹) |
| Groceries (rice, wheat, pulses, oils, sugar, packaged foods) | 10,000 | 1,200 | 500 | 700 | 8,400 |
| Medicines (basic monthly prescriptions) | 2,000 | 240 | 100 | 140 | 1,680 |
| Household Essentials (LPG, sanitary products, footwear < ₹1,000) | 3,000 | 360 | 150 | 210 | 2,520 |
| Agriculture/Farm Inputs (for rural households or family-owned land) | 2,500 | 300 | 125 | 175 | 2,100 |
| Education (books, stationery) | 1,500 | 180 | 75 | 105 | 1,260 |
Total Savings for a Middle-Class Family
- Monthly Savings: ~₹1,330
- Annual Savings: ~₹15,960
👉 That’s almost ₹16,000 saved in a year just from reduced GST on essentials. For a young professional or family balancing EMIs, school fees, and healthcare, this amount can mean:
- Paying off a credit card bill,
- Adding to an emergency fund, or
- Starting a Systematic Investment Plan (SIP) for long-term wealth.
How the 5% GST Slab Benefits Consumers
The 5% GST slab might look like just a number, but in reality, it makes a big difference in your household budget. Here’s how it translates into real savings:
🛒 Savings on Groceries
For most Indian families, groceries take up a big chunk of the monthly expenses. With essential items now in the 5% slab (instead of 12% or 18%), bills will shrink.
- Example: A family buying groceries worth ₹10,000 a month earlier paid ~₹1,200 in GST (at 12%). Now they pay only ₹500 (5%).
- Direct saving: ₹700 every month = ₹8,400 in a year.
That’s almost like getting an extra month of groceries free just from lower GST.
💊 Affordable Healthcare
Medicines are a necessity, not a luxury. By keeping them at 5% GST, the government has reduced the financial burden of healthcare.
- Example: If you spend ₹2,000 a month on essential medicines, you now pay just ₹100 as GST instead of ₹240 (at 12%).
- Savings: ₹140 every month, or ₹1,680 a year.
For families managing long-term conditions like diabetes or hypertension, this relief adds up significantly.
🌾 Support for Farmers & Rural Families
Farmers benefit directly from the 5% GST slab on agricultural goods and equipment. This ensures lower input costs, which can also help keep food prices stable for consumers.
- Example: A small farmer buying a water pump worth ₹20,000 now pays only ₹1,000 GST instead of ₹3,600 earlier.
This means farming remains affordable, and the benefit trickles down to consumers through stable food supply and pricing.
🏠 Household & Daily Needs
From footwear under ₹1,000 to sanitary products and LPG cylinders, the 5% GST slab makes everyday living a little less expensive.
- Example: A household using two subsidised LPG cylinders a month saves ~₹80–₹100 compared to earlier higher rates.
👉 In short: The 5% GST slab protects the middle class and rural India, ensuring that basic needs, food, health, farming, and daily living, stay affordable even as luxury items are taxed more heavily.
Pros and Cons of the 5% GST Slab 2025
✅ Pros
- Affordable Essentials
- Groceries, medicines, farm goods, and household items become cheaper.
- Direct savings for middle-class and rural families.
- Groceries, medicines, farm goods, and household items become cheaper.
- Healthcare Relief
- Essential drugs, medical devices, and vaccines at 5% make treatment more accessible.
- Long-term patients save more.
- Essential drugs, medical devices, and vaccines at 5% make treatment more accessible.
- Support for Farmers
- Lower GST on seeds, fertilisers, and equipment reduces farming costs.
- Helps stabilise food prices for consumers.
- Lower GST on seeds, fertilisers, and equipment reduces farming costs.
- Boosts Consumption
- With lower GST, families have more disposable income to spend or save.
- Encourages demand in local markets.
- With lower GST, families have more disposable income to spend or save.
- Encourages Insurance & Financial Security
- With life and health insurance exempt from GST altogether, families can now focus on building protection plans without added tax burden.
- With life and health insurance exempt from GST altogether, families can now focus on building protection plans without added tax burden.
❌ Cons
- Reduced Government Revenue
- Lower GST on essentials means the government collects less tax from these items.
- This may increase dependence on the higher 40% luxury slab.
- Lower GST on essentials means the government collects less tax from these items.
- Possible Misclassification Issues
- Some businesses may try to classify items as “essentials” to get the 5% benefit.
- Can lead to disputes or stricter audits.
- Some businesses may try to classify items as “essentials” to get the 5% benefit.
- Not All Essentials Are at 5%
- While basics are cheaper, some processed or packaged goods (like premium biscuits, branded snacks, or cosmetics) may still fall under the 18% slab.
- While basics are cheaper, some processed or packaged goods (like premium biscuits, branded snacks, or cosmetics) may still fall under the 18% slab.
- Short-Term Business Adjustments
- Retailers and MSMEs need to update billing systems and inventories to align with the revised list.
- Retailers and MSMEs need to update billing systems and inventories to align with the revised list.
👉 In summary: The 5% GST slab is a win for households and farmers, keeping essentials affordable, but it does shift more revenue dependence onto luxury consumption and requires businesses to stay compliant.
Conclusion: Why the 5% GST Slab Matters in 2025
The 5% GST slab under GST 2.0 is more than just a tax category, it’s a safety net for the middle class, farmers, and patients. By keeping essentials like groceries, medicines, and agricultural goods affordable, the government has ensured that basic living doesn’t become a financial burden.
For families, this means monthly savings that add up over the year. For farmers, it lowers input costs and supports food security. And for the healthcare sector, it makes treatment and medicines more accessible.
Yes, there are challenges, like misclassification risks and reduced government revenue, but overall, the 5% GST slab reflects a pro-people approach, ensuring that luxury is taxed heavily while daily needs remain within reach.
👉 For you as a consumer, the takeaway is simple: the 5% GST slab helps protect your essentials, so you can focus on building savings and financial security for your future.
FAQs on 5% GST Slab 2025
Q1. What is the 5% GST slab in 2025?
The 5% GST slab is the lowest positive GST rate under GST 2.0. It applies to essential goods like groceries, medicines, agricultural items, and household basics to make them affordable.
Q2. Which items are included in the 5% GST slab?
Key items under the 5% GST slab include:
- Food staples (rice, wheat flour, dal, edible oils)
- Medicines and medical devices
- Agricultural goods and machinery (fertilisers, seeds, pumps)
- Household essentials (footwear under ₹1,000, sanitary products, LPG)
- Educational books and public transport tickets
Q3. Are medicines covered under the 5% GST slab?
Yes ✅. Most essential medicines, life-saving drugs, vaccines, and medical devices like syringes, stents, and wheelchairs are taxed at just 5%.
Q4. Is health insurance under the 5% GST slab?
No. Health and life insurance premiums are now fully exempt from GST (0%), meaning you don’t pay any GST at all on these policies.
Q5. How does the 5% GST slab benefit farmers?
Farmers save on fertilisers, seeds, and agricultural machinery, all taxed at just 5%. This lowers their input costs and helps stabilise food prices for consumers.
Q6. Will all groceries be taxed at 5%?
Not all. Basic staples like rice, wheat, dal, and oils are at 5% (or exempt), but premium packaged or processed foods may still fall under the 18% slab.
