New GST rates kick in: Here’s how much middle class families will save on cars, food, and insurance

Starting today, India's middle class can expect to save thousands, even lakhs, annually, thanks to sweeping 2025 GST reforms that slash taxes on essentials, insurance, cars, and electronics.

The Modi government’s 2025 GST overhaul is delivering a direct and measurable boost to middle-class budgets. With sharp tax cuts across daily necessities, insurance, vehicles, and appliances, the savings are real — and start immediately.

Here’s how much the average household stands to save:

Cars and transportation: Savings up to ₹1.07 lakh

• Small cars (under 1,200cc petrol or 1,500cc diesel) now attract 18% GST instead of 28%, with the earlier cess completely scrapped. That’s up to ₹1,07,600 off the price of a hatchback like the Maruti Alto K10.
• Even for a ₹5 lakh car, the direct GST cut can shave off ₹40,000–₹50,000. Road tax and insurance premiums — which are calculated on ex-showroom prices — also fall, adding ₹6,000–₹7,000 in extra savings.

Total car-related savings: ₹50,000 to ₹1,07,000

Insurance: 100% GST exemption now in effect

• GST on life and health insurance has been abolished. Previously taxed at 18%, policies now cost significantly less.
• Health insurance premium of ₹20,000/year saves you ₹3,600.
• Term life policy costing ₹10,000/year now avoids ₹1,800 in GST.
• Total insurance savings: ₹5,400 per year (or more for higher premiums)

Daily household essentials: Lower bills every single month

• GST on everyday items like toothpaste, soaps, shampoos, biscuits, and even dairy products has dropped to just 5% (from 12–18%).
• Apparel under ₹2,500 now comes under this lower slab too.
• A typical household spends ₹5,000/month on essentials. With new rates, families save ₹200–₹300 monthly — translating to ₹2,400–₹3,600 per year.
• Additionally, many staples like roti, paneer, khakra, and basic groceries are now fully exempt from GST.

Total grocery savings: ₹3,000+ annually

Electronics & appliances: Big-ticket purchases just got cheaper

• GST on white goods — refrigerators, ACs, large TVs — has been cut from 28% to 18%. That’s a solid 7–8% off your purchase.
• Buying a ₹30,000 refrigerator now saves you ₹2,400. ACs, washing machines, and large TVs see similar drops.

Total appliance savings: ₹2,000–₹10,000 depending on item

With these cuts, the government signals a renewed focus on household consumption, hoping to spark a “savings festival” that boosts both budgets and economic activity.