The 2025 GST reform streamlines India’s tax structure into two primary slabs while reducing rates on most goods and service. Aimed at stimulating stronger consumption growth, this initiative is expected to ease household expenses, boost corporate revenues, and ultimately support a steady rise in stock market performance.
Bharat moves to four slaps system 5% 12% 18% 28%
| GST Slab | Share of Total GST Revenue | Observation / Role |
|---|---|---|
| 5% | ~7% | Lower slab covering essential goods and services |
| 12% | ~5% | Small share merged for simplification |
| 18% | ~65% | Major contributor; retained as the standard rate |
| 28% | ~11% | High-end goods; rationalized or merged to simplify structure |
The Government has removed on the individual life and health insurance. From Sep 25, 2025, Policy holder can expect lower premiums still the change won’t mean an across the board 18% rates drop. Since insurance cost include more than just taxes.
| Aspect | Before GST Exemption | After GST Exemption (Effective Sept 22, 2025) | Remarks / Impact |
|---|---|---|---|
| Policy Premium (Example) | ₹100 + 18% GST = ₹118 | ₹100 (No GST) | Effective reduction of ₹18, i.e., a 15.25% actual discount, not full 18% due to base comparison |
| Consumer Perspective | Higher total premium due to 18% GST | Lower total premium | Consumers benefit from reduced out-of-pocket expenses |
| Input Tax Credit (ITC) | Insurers could claim ITC on operational costs (rent, IT, advertising, etc.) | ITC no longer available after exemption | Insurers lose ability to offset GST paid on inputs |
| Possible Adjustment by Insurers | Not required | Base premium may increase slightly (₹100 → ₹103–₹105) | To compensate for loss of ITC benefits |
| Industry View (Kotak Institutional Equities) | Not applicable | Estimated 3–5% tariff increase may be required | Helps insurers balance cost structure post-exemption |
Not all companies are expected to pass on the full benefit of GST cuts to consumers. Some may absorb the gains to offset rising input and operational costs. However, in highly competitive market and industries such as FMCG cement, and Stell, firm are likely to transfer the benefit to consumers in order to maintain affordability and market share. In contrast, premium global brands with strong demand and pricing power, Such as apple may choose to retain prices at current levels.
| Category | Company Response / Market Behavior | Explanation / Outcome |
|---|---|---|
| General Trend | Not all companies will pass on the full benefit | Some firms may retain part of the GST savings to offset rising input or operational costs |
| Competitive Sectors (FMCG, Cement, Steel) | Likely to pass on benefits to consumers | High competition and price sensitivity push firms to maintain affordability and market share |
| Premium / Global Brands (e.g., Apple) | Unlikely to reduce prices | Strong demand and brand power allow these companies to maintain existing pricing levels |
| Household Impact | Lower monthly expenses | Consumers save more, increasing disposable income |
| Macroeconomic Effect | Boost in consumption | Higher spending drives demand across sectors |
| Stock Market Impact | Positive sentiment and earnings growth | Improved corporate revenues from stronger consumption lead to rising stock valuations |
The GST 2025 reform isn’t just about making taxes simpler it’s about helping people spend more, driving up demand, and moving India closer to global tax practice.
While it might take some time for all the benefits to show as stocks clear and insurers tweak prices the outcome is clear. Consumers save more on essentials and insurance, businesses sell more, and investors stand to gain as profits and stock values rise over time.
