GST 2.0 Begins in India: What UAE-Based Indians Must Know
Indian expats in the UAE woke up today to the launch of GST 2.0, 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 two primary slabs ā 5% and 18% ā along with a special 40% rate for luxury and sin goods.
For millions of families connected to India through remittances, shopping, and investments, this overhaul will impact daily budgets, demand trends, and even stock portfolios.
What Just Got Cheaper
Daily Essentials
Shampoo, toothpaste, hair oil, soaps, and dental floss now attract just 5% GST instead of 18%.
This cut directly lowers grocery bills for households.
Packaged Snacks & Foods
Namkeens, bhujia, mixtures, and other ready-to-eat foods move from 12% to 5%.
This is expected to boost FMCG (fast-moving consumer goods) demand.
Dairy & FMCG Brands
Amul has already cut prices: 100g butter is now ā¹58 (down from ā¹62), while UHT milk costs ā¹75 per litre.
Mother Dairy followed with price reductions on paneer, ghee, and milk-based drinks.
Insurance
Life and health insurance premiums, including term plans, family floaters, and senior citizen covers, are now completely GST-exempt.
This makes policies more affordable, particularly for families supported by UAE remittances.
Impact: For expat households, these reductions mean direct savings on groceries, dairy products, and medical coverage ā easing the financial load on families back home.
What Just Got Costlier
Tobacco & Related Products
Cigarettes, cigars, gutkha, pan masala, and chewing tobacco now face a 40% GST (up from 28%).
Luxury Cars & SUVs
High-end models with large engines move into the 40% bracket, making them significantly pricier.
Sugary & Fizzy Drinks
Carbonated drinks, sodas, and flavoured beverages also fall under the 40% category.
Alcohol
Remains outside GST ā still taxed separately by individual states.
Impact: Everyday indulgences like sodas and premium purchases such as SUVs will now hit the wallet harder.
What Remains the Same
Passenger Travel: Road transport continues at 5% without input tax credit; air tickets remain at 5% for economy and 18% for other classes.
Imports: New GST rates apply equally to imports, including goods shipped from the UAE.
Old Stock: Companies can continue selling items with old MRPs, but billing must reflect updated tax rates.
Corporate Impact
Winners: Consumer goods makers like Hindustan Unilever, Dabur, and ITCās non-tobacco businesses may gain from higher demand.
Losers: Tobacco firms, particularly ITCās cigarette division, face stronger tax pressure.
Retailers & E-commerce: Likely to see a demand surge for essentials as consumers adjust to lower GST prices.
Investors: UAE-based NRIs holding Indian stocks or mutual funds should watch quarterly results closely, as FMCG could outperform while tobacco drags.
Modiās Address: āGST Bachat Utsavā
On the eve of GST 2.0, Prime Minister Narendra Modi hailed the reform as a ādouble bonanzaā for citizens, linking it with the recent income tax relief that made earnings up to ā¹12 lakh tax-free.
āFrom soaps to medicines and insurance, everyday items will now become cheaper. Families will save more, and businesses will face fewer disputes,ā he said in his televised address.
Framing the reform as a festive move on the first day of Navratri, Modi called it a āBachat Utsavā (festival of savings) and emphasized that 25 crore Indians have risen into the āneo-middle classā over the last 11 years.
Why It Matters for UAE Expats
Remittances Stretch Further: With groceries and essentials cheaper, families in India can do more with the same money.
Imported Goods in UAE: Indian snacks and dairy products sold in UAE supermarkets could see price drops once new MRPs filter into exports.
Investment Angle: NRI investors in Indian markets may benefit from growth in FMCG and consumer stocks, though tobacco shares may weaken.
Insurance Advantage: Expats who buy policies in India save directly as GST exemptions reduce premium costs.
Final Word
With GST 2.0 now live, Indian expats in the UAE must prepare for cheaper basics, costlier luxuries, and a simpler tax regime. The reform not only lightens household budgets but also reshapes the investment outlook for NRI portfolios tied to Indiaās consumer-driven growth.
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