The Festive Buzz Around GST
As Diwali approaches, there’s chatter about something more than just fireworks and sweets, possible GST relief. In his August 15 speech, Prime Minister Modi hinted that the government may announce a major revamp of the GST system by October 2025, right around the festive season.
What’s on the Table
The most talked-about possibility is a simplification to two main slabs, 5% and 18%, with special rates for a few items. Alongside this, there’s strong speculation that:
The 28% slab could be cut to 18% for most products.
The compensation cess may be removed, lowering the final burden on goods like small cars and durables.
While not confirmed, if these steps are announced, it would be the most sweeping indirect tax change since GST was first rolled out in 2017.
Potential Impact Across Sectors
1. Consumers & Daily Life: Lower GST could ease household budgets right when families are shopping for Diwali.
2. Automobiles: Two-wheelers and small cars could see tax rates fall significantly, improving affordability.
3. Housing & Durables: Lower levies on cement, appliances, and consumer goods could support housing upgrades and festive shopping.
4. Markets: Even before confirmation, auto, cement, and consumer stocks have rallied on hopes of GST relief.
Beyond GST: A Wider Stimulus
This potential tax cut is being seen as part of a broader economic cushion against challenges like 50% tariffs on Indian exports to the U.S.. Along with income tax relief and stable interest rates, GST changes could act as a domestic demand booster at a time when global trade is volatile.
The Festive Season Multiplier
If these reforms go through, they would arrive just as households and businesses loosen their purse strings for Diwali. That timing could multiply the effect, turning policy relief into stronger sales, higher production, and better festive cheer across sectors.
In Short: What to Watch
Possible move to 2 GST slabs: 5% and 18%.
Talk of 28% merging into 18% and cess removal.
Consumer, auto, and cement sectors stand to gain the most.
A wider stimulus effect could offset global trade headwinds.
Disclaimer:
This blog is purely for educational purposes and should not be considered investment advice. Please do your own research or consult a registered financial advisor before making any investment decisions.