When the Government of India notified new CGST (Central GST) rates to take effect from 22 September 2025, it reworked the tax slabs for many goods, simplifying them and cutting rates for many items, while raising rates for certain categories. This creates both winners (businesses & consumers who benefit) and losers (those that face cost increases). Below is a breakdown.
Winners: who benefits
- Everyday / Essential Consumer Goods
Items like toiletries (shampoo, toothpaste), packaged food, milk products, fruit, etc., are seeing GST rates drop to 5% from higher slabs (12% or 18%). This benefits FMCG firms (Hindustan Unilever, Nestlé, etc.) and consumers, especially lower & middle income households. - White Goods, Appliances, & Electronics
Goods like TVs, air-conditioners, refrigerators, dishwashers are moving from higher GST slabs (often 28%) to 18%. This gives a price drop, which can spur demand especially in urban and semi-urban markets. - Automobiles and Vehicles (Lower & Mid-segment)
Small cars are getting the tax cut from 28% to 18%. Electric vehicles (EVs) kept at 5%, which supports the EV industry. Also, effective tax on luxury vehicles was reduced from ~50% (28% + big cess) to ~40%. This could make some high-end cars relatively more attractive. - Tyres & Automotive Components
Tyres are seeing a GST drop: for example, commercial-vehicle tyres moved from 28% to 18%, and tractor tyres down to 5%. This benefits both manufacturers and consumers. - Packaged Foods, Snacks, Ready-to-Eat Items
Many food items (cakes, biscuits, chocolate, sweets) as well as packaged or processed foods are moving to lower slabs, reducing costs.
Losers: who pays more or gets less benefit
- Luxury Goods & High-end Apparel
Clothing and accessories priced above ₹2,500 will see GST go up from 12% to 18%. Luxury brands that depend on price premium or visibility in this segment may be negatively affected. - Sin / Demerit Goods
Products like tobacco, cigarettes, and possibly some ‘added sugar’ items remain in very high tax slabs (compensation cess etc.), or may even go into a new 40% slab for ‘luxury/sin’ goods. - Coal and Related Heavy Inputs
Coal’s GST is rising from 5% to 18% under the new scheme. This could increase costs for industries that rely on coal (power, some manufacturing) unless costs are passed on. - Garments Above Price Threshold
Even in the textiles/apparel sector, only low-cost garment segments benefit; clothes priced above ₹2,500 are taxed at a higher rate, which may reduce consumption at the upper end. - Businesses Facing ITC / Working Capital Challenges
Even for goods moving to lower rates, some businesses might not be able to fully benefit if their input tax credit (ITC) is blocked or there are delays. Also, change-overs in system, pricing, and supply chain will cause friction.
Sectoral impacts & risks
- Automobile dealers might suffer short-term liquidity challenges, especially if compensation cess earlier accumulated is lost or non-refundable in the new structure.
- Consumer durable manufacturers may benefit, but must adjust product lines, features, margins. Some benefits may be eaten up if the cost of raw materials or input taxes doesn’t fall similarly.
- State governments could lose tax revenue from items moving to lower slabs; with compensation cess effectiveness diminishing, state fiscal pressure may increase.
The reforms are broadly pro-consumer for common, everyday items. The middle and lower middle class stand to benefit more in daily spending.Luxury or premium segment consumers (for high-end apparel, luxury vehicles) will pay more or bear less benefit.
For investors and companies, opportunities lie in anticipating demand shifts, repositioning product portfolios, and managing costs. But risks around compliance, working capital, and input tax flows are real.
