The GST Council’s latest reset, effective from September 22, marks one of the biggest overhauls of India’s indirect tax system since its rollout in 2017. By collapsing multiple slabs into two broad rates, 5% and 18%, and reserving a 40% bracket for luxury and sin goods, the reform aims to simplify compliance, reduce consumer burden, and reinvigorate consumption. Everyday essentials, mid-range consumer durables, and even insurance premiums are becoming cheaper, while luxury products and tobacco face steeper taxation.
Finance Minister Nirmala Sitharaman clarified that “the revised rates will take effect from September 22, coinciding with Navratri’s first day, except for gutkha, tobacco and related products, and cigarettes.”
FMCG: Why Your Daily Groceries Just Got Cheaper
Everyday treats, from chocolates and biscuits to ghee, paneer and packaged coconut water, have moved into the 5% slab. Input costs for FMCG makers are also set to ease, with raw materials like starches, cocoa powder and confectionery ingredients coming down from 12–18% to 5%.
Ahmed Abdel Wahab, General Manager, Mars Wrigley India, called it a turning point: “We welcome the GST Council’s decision to move a wide range of FMCG products, including chocolates, to the 5% tax slab. The reduction of GST on many raw materials from 12% or 18% down to 5% is also a significant relief that will ease input costs and strengthen supply chains for manufacturers like Mars Wrigley. This reform comes at an ideal time during the festive season, helping make everyday treats more affordable for consumers. With these tax reductions, the industry can respond quickly, restoring value in packs, innovating new formats, and supporting retailers nationwide.”
TVs And Gadgets That Won’t Break the Bank
Television sets of all sizes, along with refrigerators, washing machines, and microwaves, have moved from the steep 28% slab down to 18%. For many households, this means big-ticket purchases can finally move from the wish-list to the shopping cart.
Prashant Puri, Co-Founder and CEO, AdLift, explained: “Everyday essentials becoming cheaper, along with GST-free life and health insurance premiums, frees up household budgets. Many mid-range durables and smaller cars have moved down to 18%, which will spur discretionary spending.”
He added that the timing couldn’t be better: “The festive season could see a sharper-than-usual spike in AdEx. Simplification also helps SMEs and regional brands, who may now find it easier to formalize operations and invest in marketing.”
BFSI Gets Its Biggest Break Yet
Perhaps the most striking change is in BFSI, where life, health, and general insurance premiums now attract Nil GST. This makes policies more affordable and aligns with the government’s broader push towards financial inclusion. As Puri pointed out, such relief “frees up household budgets”, enabling families to direct savings towards both protection and consumption.
Varun Gupta, Co-Founder of GOBOULT, stressed the people-first impact: “The GST reform is not just a tax update, it is a milestone in India’s economic journey since 2017. For everyday Indians, it brings immediate relief with lower rates on essentials like food, medicines, insurance and household goods. That is a meaningful step because a tax system should first serve the people it represents.”
Cars, Bikes, and EVs Drive Into a New Lane
The auto industry, one of the most sensitive to taxation, has witnessed a major rationalisation. Small and mid-size cars, two-wheelers, and electric vehicles are now at 18% or even 5%, while luxury cars and SUVs have been shifted into the 40% slab. This dual approach makes mass mobility more affordable while keeping premium consumption in check.
C S Vigneshwar, President of FADA, welcomed the move wholeheartedly: “The 56th GST Council meeting marks a watershed moment for India’s automobile retail industry. FADA warmly welcomes the bold and progressive reforms which simplify the tax structure, lower rates for mass mobility, and bring consensus across all States. This is a decisive step that will boost affordability, spur demand, and make India’s mobility ecosystem stronger and more inclusive. As the country heads into the peak festive season, glitch-free implementation will be the key to ensuring that the benefits seamlessly reach customers.”
Yet, he cautioned that “one area that may need earliest clarification is about levy and treatment of cess balances currently lying in dealers’ books, so that there is no ambiguity during transition.”
Why Farmers and E-Commerce Players Are Cheering Too
The reform doesn’t stop at consumers and automakers. Lower GST on tractors, fertilizer inputs, and farm machinery is set to ease cost pressures on rural producers.
Soumyak Biswas, Partner, Food and Agribusiness at BDO India, explained: “Reducing the GST rates on farm machinery and fertilizer inputs is expected to give a boost to rural demand, ease off cost pressures on producers and have a cascading impact on the economy, especially in rural India. Relief from GST rate cuts on essential goods and inputs strengthens input affordability, encourages mechanization, and supports productivity gains.”
E-commerce platforms are equally upbeat. Rajneesh Kumar, Chief Corporate Affairs Officer, Flipkart Group, noted: “By lowering input costs for farmers, simplifying compliance for MSMEs, and enabling small sellers, artisans and smallholder farmers to seamlessly join e-commerce across states, these reforms will further strengthen India’s growth engine. Timely implementation ahead of the upcoming festival season will surely give a huge boost to consumption across categories.”
Why This Reform Feels Different
Tax experts stress that simplification is as important as the rate cuts. Karthik Mani, Partner, Indirect Tax, BDO India, noted: “Apart from rate rationalisation, the GST Council has also made some important changes in the GST laws to ease the process of obtaining registrations for small businesses supplying through e-commerce platforms and also for quick grant of refunds on provisional basis.”
For consumers, this GST reset translates into cheaper everyday goods, affordable insurance, mid-range electronics, and mobility options, all arriving just in time for the festive rush. For businesses, it promises predictability, efficiency, and a chance to ride India’s next wave of consumption growth.
