The new GST reform in India, known as GST 2.0, has greatly simplified the tax structure and brought major relief to various sectors. The government has reduced the number of tax slabs, making it easier to understand and reducing costs for consumers and businesses alike.
Earlier, GST had four slabs: 5%, 12%, 18%, and 28%. The reform has replaced these with just three: 5% (for essentials), 18% (for standard goods/services), and 40% (for luxury or de-merit goods). Most daily-use items and basic services are now taxed at lower rates, while luxury and “sin” goods incur much higher taxes.
Health insurance and life insurance, once taxed at 18%, are now tax-free (0% GST). Medical devices like thermometers and diagnostic kits, earlier at 18% or 12%, have dropped to 5%. This means medicines and health services have become cheaper by 7%–18% for most consumers.
Sarbvir Singh, Joint Group CEO of PB Fintech, says, “We sincerely thank the government for this monumental decision to remove GST from life and health insurance. It sends across a clear message that health and life insurance are critical products for the economy and hence, they are now GST exempt.” He adds that the move will lower entry barriers for millions of Indians and promote financial inclusion.
Pharmaceutical companies also stand to gain from reduced GST on medical devices and drugs. Ashok Nair, Managing Director of RPG Life Sciences, explains, “The recent GST rate rationalisation brings much needed relief and benefit for millions of patients by making life-saving drugs more affordable and accessible.” He notes that this tax relief will help strengthen India’s position as a hub for pharmaceutical innovation.
Beyond healthcare, consumer-facing industries such as fashion and footwear expect improved demand. Tabby Bhatia, Founder of Brune & Bareskin, says, “A rationalised and uniform GST structure will bring much-needed clarity, transparency, and predictability to the industry.” Similarly, Ramesh Kumar Dua, Chairman and Managing Director of Relaxo Footwears, says, “The recent GST reforms are a welcome move for the overall industry and will play a crucial role in reviving trade sentiment. It is particularly encouraging for the footwear sector.”
Personal care and beauty brands are also optimistic. Vidur Kapur, Director of O3+ Professional, points out, “The recent GST rate cut from 18% to 5% is a move that could boost consumer confidence and revive footfall in salons, spas, and wellness centres across the country.”
In the same category, companies see a direct link to rural demand. Sunil Agarwal, Co-founder and Chairman of Joy Personal Care (RSH Global), explains, “For households, this tax relief eases financial pressure and makes everyday essentials more affordable, while also encouraging higher consumption. Rural India has been driving FMCG growth for six consecutive quarters, and this move will further strengthen demand in these price-sensitive markets.”
Shaily Mehrotra, Co-Founder and CEO of Fixderma, echoes this sentiment, saying, “The GST reform is a welcome move for every household, it makes daily essentials a little lighter on the pocket.”
The home and décor industry sees a direct benefit from reduced input costs. Jayesh Sali, Senior GM and Marketing Head, MagickHome India, says, “This is expected to lower production costs and, in turn, make high-quality home decor more accessible and affordable for a broader customer base.”
FMCG giants believe the reform comes at a critical time. Items like hair oil, toothpaste, soaps, and namkeens, which were earlier taxed at 12% or 18%, are now in the 5% GST bracket. Basic dairy products, baby products, utensils, and personal care items have also moved to 5% GST from either 12% or 18%, resulting in significant price drops of 7%–13% in these categories.
Tarun Arora, CEO and Wholetime Director of Zydus Wellness, explains, “These measures provide the catalytic boost needed to sustain resilience. It also lays the foundation for sustained consumer confidence by directly addressing inflationary pressures.”
Echoing this sentiment, Mohit Malhotra, CEO of Dabur India, adds, “This reform not only makes everyday essentials like shampoos, soaps, and toothpastes more affordable for millions of households, but also signals a strong commitment to inclusive growth and domestic consumption revival.”
Appliance makers expect stronger demand during the festive season. NS Satish, President of Haier Appliances India, says, “Lower GST on key appliances will spur festive season demand and support families in upgrading to smarter, more efficient products at better value.”
Kamal Nandi, Business Head and EVP at Godrej Appliances, notes that reducing GST on air conditioners and dishwashers from 28% to 18% will improve affordability and penetration.
He says that with increasingly harsh summers in India, air conditioners are no longer a luxury and go a long way in improving the day to day quality of lives for consumers improving their productivity levels. “ACs are estimated to be at around 10% penetration levels (dishwashers are at negligible penetration). The drop in GST improves affordability for consumers and is expected to improve product penetration levels over time,” he adds.
Entrepreneurs and consultants view GST 2.0 as a structural reset. Somdutta Singh, Founder and CEO of Assiduus Global, says, “Economists say this can lift demand and add about 1 to 1.2% to GDP growth over the next year. Inflation is also expected to cool by around 1%.”
Echoing this, Ankit Agrawal, Director of Mysore Deep Perfumery House, says, “We welcome the government’s decision to reduce GST on personal care essentials from 18% to 5%, a move that will provide direct relief to consumers and boost demand in rural and semi-urban markets.”
