GST Cuts on Cars, Two-wheelers, Food and Services To Lift Middle-class Demand, but Benefits Depend on Passthrough: CRISIL

The changes under the new goods and services tax (GST) framework, effective from 22 September 2025, are expected to boost demand for essential and discretionary goods, particularly among India’s middle class. A CRISIL Ratings report says the government’s decision to reduce GST rates on 11 of the top 30 consumption items would ease household budgets and stimulate spending, but the outcome will critically depend on how much of the reduction is actually passed on to consumers. The average GST on these top consumption items has come down from about 11% to 9%, with one-third of a typical household’s monthly expenditure now facing lower taxation. Goods such as milk-based products, medicines, processed food, footwear, two-wheelers, televisions and entry-level cars will become more affordabl