Core Points - The new GST rates effective from September 22, 2025, will lead to reduced prices for a variety of household items, vehicles, and food products, benefiting the common man and middle class [2][14] - The GST structure has been simplified to two main rates of 5% and 18%, with many items moving to a 0% tax bracket [2][14] - Certain items, such as clothing priced above Rs 2,500, will now incur a higher GST rate of 18%, up from 12% [2][14] Summary of GST Rates 0% GST Rate - Items such as UHT milk, paneer, various Indian breads, and specific medicines are now under the 0% tax bracket [5][14] 5% GST Rate - A range of food items, including condensed milk, butter, and various nuts, will now be taxed at 5% [7][14] 18% GST Rate - Items like clothing above Rs 2,500 and certain luxury goods will be taxed at 18% [2][14] 40% GST Rate - This rate applies to sin or luxury goods, although specific items under this category were not detailed in the provided content [12][14]

Consumption Sector - The recent GST reforms are expected to boost affordability and consumption across rural and urban markets, with around 90% of items moved from higher to lower tax slabs [1][38] - Experts anticipate a premiumisation effect among low- and middle-income households, as savings on essential goods will redirect purchasing power towards high-value consumption [2][38] - The consumption sector is projected to recover over the next 12-15 months, with private consumption growth expected to rise by 40-50 basis points in the second half of the current financial year [4][41] Corporate Profitability - Lower prices from GST reforms will create volume acceleration for producers, supporting profit margins and leading to an anticipated overall profitability increase of 1-1.5% relative to 2024-25 earnings [5][41] - The reforms are expected to stimulate demand for first-time buyers and replacement purchases, particularly during the festive season, with an industry expectation of a 10-15% improvement in demand for room air conditioners [22][41] Sector-Specific Impacts - Key beneficiaries in the consumer FMCG sector include Britannia Industries, Colgate Palmolive (India), Nestle India, and Emami due to reduced GST on essentials from 12-18% to 5% [11][15][41] - In the consumer durables sector, companies like LG, Daikin, Blue Star, and Dixon Technologies will benefit from reduced GST on room air conditioners and dishwashers from 28% to 18% [18][41] - The automobile sector, including Maruti Suzuki, TVS Motor, Hero MotoCorp, and Bajaj Auto, will see positive impacts from reduced GST rates on commercial vehicles and small cars [23][41] Infrastructure and Housing - The cement industry is expected to benefit from a reduction in GST from 28% to 9%, potentially lowering cement prices by Rs.25-30 per bag, which will support infrastructure and housing sectors [24][41] - Cost-efficient firms like Prism Johnson and Heidelberg Cement are positioned to enhance net realizations and margins over the medium to long term due to these reforms [25][41] Renewable Energy - The renewable energy sector will benefit from a reduction in GST on equipment from 12% to 5%, with key beneficiaries including Tata Power, JSW Energy, and Vikram Solar [26][41] - This reduction is expected to lower capital costs for solar and wind power projects, improving the internal rate of return and supporting government initiatives around renewable energy transition [31][41] Banking and Financial Services - Banks such as HDFC Bank, ICICI Bank, and IDFC First Bank are expected to benefit from increased demand for credit due to a pick-up in consumption and economic activities [32][41] - Non-Banking Financial Companies (NBFCs) focused on retail loans will also benefit from rising demand for consumer durables and vehicles [32][41] Insurance and Textiles - The insurance sector will face mixed impacts, with a reduction in GST on life and health insurance to nil, improving affordability but potentially diluting margins due to loss of input tax credit [33][41] - The textile industry will see a reduction in GST on fabrics and home textiles from 12% to 5%, benefiting companies like Sanathan Textiles and Grasim Industries [30][36][41] Oil and Gas - The oil exploration sector will be adversely impacted by an increase in GST from 12% to 18%, affecting companies like ONGC and Oil India [37][41] - The increase in costs for exploration and production is expected to dent cash flows significantly, with estimates of Rs.2,500-3,000 crore in losses for ONGC [40][41]