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GST Cuts to Boost Festive Demand, Ease Prices of Essentials and Medicines

  • By Thetripurapost Desk, New Delhi
  • Sep 04, 2025
  • 704

The Goods and Services Tax (GST) Council’s decision to slash rates on everyday essentials and life-saving medicines is set to provide a major fillip to consumer demand and household budgets ahead of the festive season. The reforms, effective September 22, come as India gears up for Navratri, the first leg of the crucial festive shopping period.

The reduction covers a host of staples such as soaps, shampoos, hair oils, toothpaste, and packaged snacks, in addition to electronics. Industry experts say the move is expected to unlock fresh consumption after months of sluggish demand, particularly in rural and semi-urban markets.

“This is a game changer. Barring sin goods, almost all food items are in the 5% tax slab,” said Mayank Shah, vice-president at Parle Products. He noted that while larger packs will see price cuts, smaller packs are more likely to offer additional grammage rather than lower prices.

Mohit Malhotra, CEO at Dabur, called the reform a “powerful catalyst” for demand, saying it will energise consumer sentiment and boost confidence during the festive season. Similarly, Namit Puri, Senior Partner at BCG, said the cuts would strengthen investor sentiment and add “meaningful momentum” to growth.

The changes are also expected to benefit households immediately, though some experts pointed out that the impact would be visible only on new stock entering the market. Re-stickering of existing retail packs could be a challenge, with discounts on larger packs likely until new prices come into effect.

Beyond consumer goods, the reform extends crucial relief to the healthcare sector. GST has been reduced from 12% to nil on 33 life-saving drugs, and from 5% to nil on three medicines used for cancer, rare diseases, and chronic conditions. On other medicines, the tax rate has been lowered from 12% to 5%.

Calling it a “landmark step,” Sudarshan Jain, Secretary-General of the Indian Pharmaceutical Alliance, said the cut would make treatments more affordable and reduce the burden on patients.

Tax experts welcomed the move as part of what they termed “GST 2.0.” According to Mahesh Jaising, Partner & Indirect Tax Leader at Deloitte India, “Significant rate reductions on items of common use bring much-needed relief to households, while exemptions on food items help curb classification disputes.”

With the timing of the rollout aligned with Navratri, companies believe the GST cut will prevent any demand disruption and trigger strong festive consumption, providing a much-needed push to India’s economic revival story.