Government Prepares Major Consumer-Friendly Tax Move
India’s GST Council is considering cutting tax rates GST cut on premium durables like air conditioners, refrigerators, and large-screen TVs from 28% to 18%. This aims to boost demand, revive consumer sentiment, and support manufacturing, which has seen subdued growth in recent quarters.
Festive Season Demand in Focus
India’s festive season (September–December) drives 35–40% of annual consumer durable sales. The proposed GST cut could increase premium durable sales by 20–25% year-on-year ahead of Diwali.
With households recovering from inflationary pressures, this policy could act as a catalyst for demand revival.
Industry Welcomes the Move
Manufacturers like LG, Samsung, Voltas, and Panasonic have expressed optimism, especially for Tier-2 and Tier-3 cities. Industry bodies, including CEAMA, note that India’s air conditioning penetration is below 10%, compared to over 90% in developed nations.
The move could accelerate adoption, boost “Make in India” manufacturing, and generate jobs in supporting industries.
Boost to Retailers and E-Commerce Platforms
Retail giants like Amazon, Flipkart, and Reliance Digital are preparing for mega festive sales. Lower GST cut on premium durables would allow competitive pricing, bundled deals, and no-cost EMI schemes, potentially leading to record-breaking sales during the festive quarter, which already contributes up to 45% of annual revenues for many retailers.
Impact on Government Revenue and Economy
While a GST cut on premium durables reduction may initially reduce tax collections, policymakers believe it could stimulate consumption-led growth, offsetting losses over time.
Economists highlight this aligns with India’s strategy to boost domestic demand amid global economic challenges, supporting the projected 6.5% GDP growth rate for FY2025–26.
Consumer Sentiment on the Rise
A premium refrigerator priced at ₹60,000 could drop by ₹5,000–₹6,000 post-GST cut on premium durables, making such appliances more affordable for aspirational households.
With rising urban incomes, increased credit access, and strong rural remittances, consumer confidence is set to improve further.
Balancing Affordability and Growth
The GST cut on premium durables Council is expected to finalize its decision soon. While balancing demand stimulation vs revenue loss, experts believe a consumer-centric approach will be favored.
This move could also pave the way for future GST rationalization on high-demand goods, creating a more growth-oriented tax regime.
Outlook
The potential GST cut on premium durables is more than a festive incentive—it reflects the government’s commitment to strengthen consumption, energize industry, and maintain growth momentum.
As the festive season nears, all eyes are on the GST Council’s announcement, which could mark the start of a consumer-driven economic upswing in late 2025.
