The GST Next-Gen reforms, effective from 22 September 2025, have brought one of the biggest tax overhauls in India since the original GST rollout in 2017. The GST Council has simplified the structure and slashed rates across multiple categories to boost consumption, ease compliance, and support India’s growth story.
But beyond the broad reforms, the real question for consumers and investors is: “Which sectors will rise, which may face pressure, and how will these changes impact spending and portfolio strategy?” Continue reading to gain a better understanding.
What’s New in GST 2.0?
The big change in GST 2.0 is that India’s complicated tax structure is now reduced to just three slabs:
- 5% (Merit Rate): Covering essentials and priority goods that directly impact daily living.
- 18% (Standard Rate): Now the broad umbrella rate, applied to most goods and services, including several items earlier taxed as “luxury.”
- 40% (Demerit Rate): Reserved for luxury and sin goods such as aerated drinks, tobacco, and premium vehicles.
Goods/Services | Old GST Rate | New GST Rate | Impact |
Essentials (food grains, dairy, medicines) | 5-12% | 0-5% | Keeps essentials affordable for households |
Consumer Durables & Electronics (TVs, ACs, washing machines, refrigerators) | 28% | 18% | Price cuts ahead of the festive season could brighten prospects for white goods |
Automobiles (small cars, two-wheelers) | 28% | 18% | More affordable; auto stocks favoured |
Tractors & Farm Machinery | 12-18% | 5% | Improves rural affordability, benefits agri-equipment players |
FMCG Staples (oil, soaps, biscuits) | 12-18% | 5% | Volume growth expected in rural and urban markets |
Textiles & Apparel | 12% | 5% | Duty inversion fixed; better cash flow and export edge |
Healthcare (lifesaving drugs, insurance) | 5-18% | 0% | Cheaper healthcare & insurance; higher adoption likely |
Hospitality & Travel | 28% | 18% | Domestic tourism boosted; hotel/airline stocks benefit |
Real Estate Inputs (cement, paint) | 28% | 18% | Developer costs down; real estate margins rise |
Luxury & Sin Goods | 28% | 40% | Demand hurt; luxury/sin stocks may face headwinds |
Understanding which slab applies to your business can be tricky. If you’re unsure how GST 2.0 will impact your pricing, margins, or compliance, Ashvvy Investments can help you decode the reforms and create a tax-smart business strategy.
Sectors Likely to Gain
Here’s how GST 2.0 will reshape various industries:
- Consumer Durables & Electronics – Lower prices mean higher sales volumes, especially in the festive season. This sector could see margin expansion and short-term rallies.
- Automobiles & Ancillaries – GST cuts improve affordability, reviving sales in the mass-market segment. Expect volume-driven earnings growth.
- FMCG & Staples – Tax savings put more cash in consumer hands, driving steady, predictable volume growth, especially in rural markets.
- Textiles & Apparel – Uniform rates fix duty inversion and improve working capital. This could benefit exporters and organized apparel chains.
- Healthcare & Insurance – Lower costs encourage insurance penetration and hospital visits. Expect higher revenue growth for healthcare providers and insurers.
- Real Estate & Construction – Lower input costs could boost developer margins and speed up housing launches, benefiting real estate-linked portfolios.
- Hospitality & Travel – Lower travel costs should support tourism and business travel. Occupancy rates and ticket bookings could rise, improving top-line growth.
Sectors That May Face Pressure
- Luxury & Sin Goods – Higher taxes are likely to suppress demand for tobacco, luxury cars, and aerated beverages, which may hit volumes and margins.
- Premium Auto Segment – High-end vehicles may experience slower sales due to increased on-road prices, which can harm profitability in this niche.
What You Should Do as an Investor
- Rebalance Your Portfolio: Tilt towards sectors aligned with mass consumption, affordable mobility, healthcare, and housing.
- Use Festive Demand to Your Advantage: Short-term opportunities may emerge in consumer durables, electronics, and auto-related stocks.
- Focus on Structural Themes: Healthcare, insurance, and FMCG have long-term growth potential due to lower taxes and rising affordability.
- Stay Cautious on Luxury & Sin Goods: These sectors could face margin pressure and weaker demand through 2025.
Final Thoughts
The GST Bachat Utsav makes most essentials and mid-range goods cheaper while simplifying compliance. This is a strong push for consumption-led growth.
For investors, this is the time to align portfolios with rising sectors- consumer goods, autos, healthcare, and real estate, while being cautious on luxury and sin goods. 2025 could mark the beginning of a new growth cycle where lower taxes meet higher demand — a win-win for consumers and the economy.
