GST Reform 2025 / Are you benefiting from the GST rate cut? Here's a reality check

GST Reform 2025: The government recently announced a reduction in Goods and Services Tax (GST) rates, raising hopes of cheaper prices for major items like televisions, air conditioners, and cars. This news is a source of joy for consumers, especially during festivals like Diwali. The government has also simplified GST and reduced interest rates to encourage spending, boosting the economy. But the big question is: will this reduction truly benefit ordinary shoppers, or is it just a gimmick?

GST 2.0: What are the new changes?

Effective September 22, 2025, GST rates have been divided into three simplified slabs—5%, 18%, and 40%. This aims to make the tax system more transparent and consumer-friendly. In particular, tax rates on essential goods like medicines and milk have been reduced, which is expected to provide relief to the general public. Additionally, taxes have been reduced on high-end items like air conditioners, televisions, and cars.

For example:

• Prices of small cars have decreased by ₹40,000 to ₹75,000.
• Reduced taxes on two-wheelers have reduced their prices by ₹7,000 to ₹18,800.
• On the surface, these changes appear beneficial to consumers, but are these savings actually being passed on to customers?

Is the GST reduction resulting in real savings?

The GST rate cut has reduced the prices of many goods, but the market reality reveals something else. Many retailers and brands reap the benefits of these reductions by increasing the maximum retail price (MRP). For example, the selling price of an air conditioner may appear lower, but its MRP is increased. This allows shopkeepers to claim significant discounts, while the actual savings to the customer are negligible.

According to a report in the Economic Times, a survey conducted after the 2018-19 GST reduction found that only 20% of shoppers actually benefited. In the remaining cases, brands and shopkeepers retained a significant portion of the savings. A similar situation is likely to arise this time, and consumers need to be cautious.

Be cautious during the festive season

Festive seasons like Diwali are the most exciting times for shopping. The GST reduction, along with discounts and offers offered by shopkeepers and online platforms, attract shoppers. However, it's not wise to rush into this glitzy shopping spree. If your income hasn't increased significantly, relying on credit cards or EMIs can lead to financial stress later on. It's not a good idea to overspend just because something appears cheaper.

How to shop smart?

• To take advantage of the GST reduction, it's important to take some precautions:
• Compare prices: Check prices at online and offline stores. Sometimes the price of the same product varies from place to place.
• Keep an eye on the MRP: Ensure that you are benefiting from the tax deduction, and not the brand or shopkeeper adding it to their margins.
• Use EMIs and credit cards wisely: Avoid taking on unnecessary debt due to attractive offers. Spend only as much as your pocket allows.
• Prioritize needs: Avoid buying non-essential items during the festive season because of offers.

Be aware, buy wisely

The GST reduction is certainly a positive step for consumers, but its full benefits can only be reaped if you shop carefully. Understand the marketing strategies of shopkeepers and brands, compare prices, and spend only according to your needs. Take wise steps to avoid turning the joy of festivals into a debt burden. The lure of cheap goods is beneficial only if it suits your pocket and needs.