“अर्थव्यवस्था • लोककल्याण • समृद्धि”
Since its launch in 2017, the Goods and Services Tax (GST) has been India’s most ambitious indirect tax reform. Over the years, it has streamlined the tax system, boosted compliance, and supported formalization. In September 2025, the 56th GST Council meeting introduced GST Reforms 2.0, marking a new phase focused on simplification, fairness, and economic growth.
Let’s examine the impact of GST Reforms 2.0 on three key fronts: the Indian economy, the general public, and Indian equities.
1. GST Reforms 2.0 and the Indian Economy
Rate Rationalization Across Sectors: GST rate cuts on handicrafts, footwear, coir products, toys, medicines, textiles, and FMCG goods, while raising rates on luxury consumption like casinos, betting, and premium vehicles.
Boost to Exports & Trade Facilitation: Refunds for exporters and inverted duty cases will be faster with a risk-based 90% provisional refund system.
Simplified Compliance: One-time registration for small e-commerce sellers across multiple states; easier processes for exporters.
Dispute Resolution Strengthened: The GST Appellate Tribunal (GSTAT) will clear appeals backlog by June 2026, ensuring faster judgments.
2. GST Reforms 2.0 and the General Public
a) Relief in Daily-use Items
Lower GST on footwear, textiles, toys, household goods, and health products makes essentials more affordable for families.
b) Real-Life Example: Middle-Class Household Savings
Suppose a middle-class family wants to upgrade their home by buying a washing machine and an air conditioner:
Before GST Reforms 2.0 (28% GST):
Washing machine (base ₹20,000) → ₹25,600
Air Conditioner (base ₹30,000) → ₹38,400
Total = ₹64,000
After GST Reforms 2.0 (18% GST):
Washing machine (base ₹20,000) → ₹23,600
Air Conditioner (base ₹30,000) → ₹35,400
Total = ₹59,000
👉 The family saves ₹5,000 simply due to lower GST rates.
c) Real-Life Example: Small Business Owner
Consider a small bakery owner investing in new ovens and refrigeration equipment:
Before GST Reforms 2.0 (28% GST):
Bakery oven (base ₹1,00,000) → ₹1,28,000
Commercial refrigerator (base ₹80,000) → ₹1,02,400
Total = ₹2,30,400
After GST Reforms 2.0 (18% GST):
Bakery oven (base ₹1,00,000) → ₹1,18,000
Commercial refrigerator (base ₹80,000) → ₹94,400
Total = ₹2,12,400
👉 The business owner saves ₹18,000, which can be reinvested in raw materials, staff, or expansion.
d) Real-Life Example: Software Engineer Buying a Car
Consider a software engineer purchasing a car worth ₹10,00,000 (base price):
Before GST Reforms 2.0 (28% GST):
Car price = ₹10,00,000 + ₹2,80,000 GST = ₹12,80,000
After GST Reforms 2.0 (18% GST):
Car price = ₹10,00,000 + ₹1,80,000 GST = ₹11,80,000
👉 The buyer saves ₹1,00,000 — a significant relief for middle-class professionals aspiring to own a vehicle.
e) Inclusive Benefits
These examples show that GST Reforms 2.0 benefit not just corporates, but also middle-class families, working professionals, and small entrepreneurs. By lowering tax rates on appliances, equipment, and vehicles, the reforms put more money in people’s pockets, boosting both consumption and savings.
3. GST Reforms 2.0 and Indian Equities
Sectoral Impact Table
| Winners (Positive Impact) | Reason | Losers (Negative Impact) | Reason |
|---|---|---|---|
| FMCG (HUL, ITC FMCG, Dabur, Marico) | Lower GST on packaged foods, toiletries, soaps, footwear, etc. boosts demand. | Gaming & Betting (Nazara Tech, Delta Corp) | GST hiked to 40% on casinos, online gaming, and race clubs. |
| Textiles & Apparel (Trent, Arvind, Trident) | Lower GST on fabrics, footwear, and accessories improves affordability and volumes. | Luxury Auto (Mercedes, BMW India) | Cars and high-end bikes taxed at 40%. |
| Insurance (HDFC Life, Star Health, SBI Life) | GST exemption on premiums drives higher penetration. | Tobacco & Pan Masala (ITC, Godfrey Phillips) | Tax on Retail Sale Price increases effective tax burden. |
| Logistics & E-commerce (Delhivery, Nykaa, Zomato) | Simplified compliance, one-time GST registration, and rationalized transport taxes. | Alcoholic Beverages & Caffeinated Drinks | Tax raised to 40% on aerated/caffeinated beverages. |
| Healthcare & Pharma (Sun Pharma, Apollo Hospitals) | Lower GST on medicines, devices, and health essentials supports affordability. |
4. Short-Term vs Long-Term Impact on GST Revenue
While GST Reforms 2.0 involve a reduction in tax rates on many essential and consumer-focused goods, this may lead to a temporary dip in government revenue. For instance, lower GST on appliances, textiles, and insurance premiums reduces immediate collections.
However, these reforms are designed with a long-term growth strategy in mind:
Lower prices increase affordability, encouraging more households and businesses to spend.
Boost in consumer demand leads to higher sales volumes across industries.
Over time, the overall GST revenue base expands, as more transactions are captured in the formal economy.
A stronger demand cycle supports higher corporate earnings, employment, and ultimately, greater tax inflows for the government.
👉 In other words, while the government may face short-term revenue sacrifice, the reforms are expected to create a much larger GST revenue stream in the long run, ensuring fiscal sustainability alongside economic growth.
Conclusion
GST Reforms 2.0 (2025) mark a clear shift toward inclusive growth and fiscal discipline. For the economy, the reforms simplify taxation, support exports, and boost investments. For the general public, they reduce prices of daily-use goods and health services while curbing misuse in sectors like restaurants and tobacco. For Indian equities, consumption-driven sectors are clear winners, while speculative and luxury segments face pressure.
Real-life examples show that the reforms directly touch the lives of common people and small businesses — whether it’s a family saving ₹5,000 on home appliances, a bakery owner saving ₹18,000 on equipment, or a software engineer saving ₹1,00,000 on a car purchase.
As India refines its GST regime, the balance of growth + compliance + fairness ensures that GST remains a cornerstone of India’s economic journey.
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