GST 2.0 Begins in India: What UAE-Based Indians Must Know
<p>Indian expats in the UAE woke up today to the launch of <strong>GST 2.0</strong>, the biggest tax reform since the Goods and Services Tax was introduced in 2017. Starting September 22, 2025, India has scrapped its old four-rate system and shifted to a simplified structure with <strong>two primary slabs — 5% and 18% — along with a special 40% rate for luxury and sin goods.</strong></p><p>For millions of families connected to India through remittances, shopping, and investments, this overhaul will impact daily budgets, demand trends, and even stock portfolios.</p><h4>What Just Got Cheaper</h4><p><strong>Daily Essentials</strong></p><p>Shampoo, toothpaste, hair oil, soaps, and dental floss now attract just <strong>5% GST instead of 18%</strong>.</p><p>This cut directly lowers grocery bills for households.</p><p><strong>Packaged Snacks & Foods</strong></p><p>Namkeens, bhujia, mixtures, and other ready-to-eat foods move from 12% to 5%.</p><p>This is expected to boost FMCG (fast-moving consumer goods) demand.</p><p><strong>Dairy & FMCG Brands</strong></p><p>Amul has already cut prices: 100g butter is now <strong>₹58 (down from ₹62)</strong>, while UHT milk costs <strong>₹75 per litre</strong>.</p><p>Mother Dairy followed with price reductions on paneer, ghee, and milk-based drinks.</p><p><strong>Insurance</strong></p><p>Life and health insurance premiums, including term plans, family floaters, and senior citizen covers, are now <strong>completely GST-exempt</strong>.</p><p>This makes policies more affordable, particularly for families supported by UAE remittances.</p><p><strong>Impact:</strong> For expat households, these reductions mean direct savings on groceries, dairy products, and medical coverage — easing the financial load on families back home.</p><h4>What Just Got Costlier</h4><p><strong>Tobacco & Related Products</strong></p><p>Cigarettes, cigars, gutkha, pan masala, and chewing tobacco now face a <strong>40% GST (up from 28%)</strong>.</p><p><strong>Luxury Cars & SUVs</strong></p><p>High-end models with large engines move into the 40% bracket, making them significantly pricier.</p><p><strong>Sugary & Fizzy Drinks</strong></p><p>Carbonated drinks, sodas, and flavoured beverages also fall under the 40% category.</p><p><strong>Alcohol</strong></p><p>Remains outside GST — still taxed separately by individual states.</p><p><strong>Impact:</strong> Everyday indulgences like sodas and premium purchases such as SUVs will now hit the wallet harder.</p><h4>What Remains the Same</h4><p><strong>Passenger Travel</strong>: Road transport continues at 5% without input tax credit; air tickets remain at 5% for economy and 18% for other classes.</p><p><strong>Imports</strong>: New GST rates apply equally to imports, including goods shipped from the UAE.</p><p><strong>Old Stock</strong>: Companies can continue selling items with old MRPs, but billing must reflect updated tax rates.</p><h4>Corporate Impact</h4><p><strong>Winners</strong>: Consumer goods makers like Hindustan Unilever, Dabur, and ITC’s non-tobacco businesses may gain from higher demand.</p><p><strong>Losers</strong>: Tobacco firms, particularly ITC’s cigarette division, face stronger tax pressure.</p><p><strong>Retailers & E-commerce</strong>: Likely to see a demand surge for essentials as consumers adjust to lower GST prices.</p><p><strong>Investors</strong>: UAE-based NRIs holding Indian stocks or mutual funds should watch quarterly results closely, as FMCG could outperform while tobacco drags.</p><h4>Modi’s Address: “GST Bachat Utsav”</h4><p>On the eve of GST 2.0, Prime Minister Narendra Modi hailed the reform as a <strong>“double bonanza”</strong> for citizens, linking it with the recent income tax relief that made earnings up to ₹12 lakh tax-free.</p><p>“From soaps to medicines and insurance, everyday items will now become cheaper. Families will save more, and businesses will face fewer disputes,” he said in his televised address.</p><p>Framing the reform as a festive move on the first day of Navratri, Modi called it a <strong>“Bachat Utsav”</strong> (festival of savings) and emphasized that 25 crore Indians have risen into the “neo-middle class” over the last 11 years.</p><h4>Why It Matters for UAE Expats</h4><p><strong>Remittances Stretch Further</strong>: With groceries and essentials cheaper, families in India can do more with the same money.</p><p><strong>Imported Goods in UAE</strong>: Indian snacks and dairy products sold in UAE supermarkets could see price drops once new MRPs filter into exports.</p><p><strong>Investment Angle</strong>: NRI investors in Indian markets may benefit from growth in FMCG and consumer stocks, though tobacco shares may weaken.</p><p><strong>Insurance Advantage</strong>: Expats who buy policies in India save directly as GST exemptions reduce premium costs.</p><h3>Final Word</h3><p>With GST 2.0 now live, Indian expats in the UAE must prepare for <strong>cheaper basics, costlier luxuries, and a simpler tax regime.</strong> The reform not only lightens household budgets but also reshapes the investment outlook for NRI portfolios tied to India’s consumer-driven growth.</p>