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A year after GST cuts, India is buying bigger

By Sohail Khan 22 September 2026, 11:56 am

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Business News›News›Economy›Finance›Rs 2 lakh crore bonanza: GST's one-year old tax gift showing up in cars, TVs and revenues

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Rs 2 lakh crore bonanza: India’s GST one-year old tax gift showing up in cars, TVs and revenues
Synopsis

GST collections show economic activity holding up after the overhaul. Consumers are upgrading to better products and larger screen televisions. Automobile dispatches have remained particularly strong after the tax changes. FMCG companies saw an initial pickup in volumes after the GST changes. Geopolitical events and rising input costs present new challenges.

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India’s GST cuts, which came into effect on September 22, 2025, appear to have done more than simply lower sticker prices. A year on, they are reshaping what consumers buy– from two-wheelers and entry-level cars to larger television screens– even as higher input costs and geopolitical uncertainty threaten to take some of the shine off the consumption recovery.

Gross GST collections have stayed above the Rs 1.9 lakh crore mark in recent months, rising 14.8% year-on-year to nearly Rs 2 lakh crore in August 2026. Domestic GST revenue rose 9.3% during the month, while the April-June quarter had already seen gross collections rise 8.4% to Rs 6.32 lakh crore. The numbers do not measure consumption directly, and import taxes have contributed significantly to the recent rise, but they point to economic activity holding up even as consumers navigate higher costs and geopolitical uncertainty.

The interesting part, however, is what Indians are doing with that spending power.

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From two-wheelers to cars: GST changes the upgrade equation

Automobile dispatches have remained particularly strong. Passenger vehicle dispatches hit a record 12.7 lakh units in April-June 2026, rising 25.9% from a year earlier, while two-wheeler dispatches climbed 20.3% to 56.3 lakh units, according to the Society of Indian Automobile Manufacturers (Siam), as reported by The .

The numbers, however, refer to supplies from manufacturers to dealers and not direct purchases by consumers.

The recovery is also changing the profile of buyers. First-time car buyers are returning to the market in larger numbers, with lower taxes reviving demand for entry-level passenger vehicles. Carmakers have also seen stronger contributions from first-time buyers and growth in entry-level SUVs.

Also Read: First-time car buyers make a comeback as lower GST boosts small-vehicle demand

The GST overhaul, along with easier financing, has helped improve affordability. ET had earlier reported that vehicle registrations, a proxy for retail sales, rose 7.7% in calendar 2025, with passenger vehicle registrations up 9.7% and two-wheeler registrations rising 7.2%.

TV buyers are buying bigger, not necessarily more

The shift is not limited to cars.

Television buyers are increasingly opting for larger screens, suggesting that lower taxes are encouraging consumers to trade up rather than simply buy more units. Smart TV shipments grew 10% year-on-year in October-December 2025, according to Counterpoint Research, before declining 3% in January-March 2026.

Within the category, TVs of 55 inches and above were the fastest-growing segment in the March quarter and accounted for nearly a third of shipments.

Intex Technologies director Keshav Bansal told The that the GST cut had created “a meaningful affordability window” for larger televisions.

Intex’s consumer durables business grew 80% in FY26, with smart TVs among the drivers. But Bansal said the increase was not purely a volume story.

“Unit volumes have not risen in proportion to value growth; the more significant shift has been in product mix,” he said, with consumers opting for larger screens and better technology.

ET had reported soon after the GST overhaul that the tax cuts were accelerating premiumisation across categories. Companies saw stronger demand for 55-65 inch televisions, five-star air conditioners and higher-end cars, while entry-level products remained relatively flat.

The GST boost meets a geopolitical speed bump

The television recovery, however, has since hit a speed bump. Counterpoint’s tracker recorded a 9.8% year-on-year fall in TV shipments in April-June, amid uncertainty following the February 28 launch of Operation Epic Fury by the US and Israel against Iran.

The cost side has also started eating into the benefit of lower taxes.

Bansal said rising input costs, including memory chips used in televisions, and the expense of complying with newer energy-efficiency norms for air conditioners had absorbed part of the GST benefit. Lower GST had supported AC demand alongside a favourable summer and a low base.

Lower GST helps, but input costs are fighting back

Liberty Shoes executive director Anupam Bansal said the tax reduction remained positive over the longer term, particularly as consumers shift towards branded products.

“In the long-term, it is definitely a positive, especially with people looking to move to branded products. But there is some impact in the short run due to the recent increase in input prices. Also, full refund of input tax credit will help in offsetting some of the cost,” he told The .

FMCG sees an early lift, then a reality check

The picture is similarly mixed in fast-moving consumer goods.

FMCG companies initially reported a pickup in volumes after the GST changes. In February, as reported by ET, consumer goods makers were seeing signs of a turnaround from December, after several quarters of subdued demand. Companies expected easing inflation and lower GST rates to shift growth from price-led gains towards volumes.

Nestlé India, Hindustan Unilever, Marico and Dabur were among companies that reported signs of improving volume growth.

But the benefits have not been uniform. ET had reported that consumers initially directed their savings towards bigger-ticket purchases such as cars and consumer durables, where the tax benefit was more visible, rather than everyday products such as biscuits, soaps and shampoos.

That has left the consumption story at an interesting juncture. The GST cuts appear to have unlocked some pent-up demand and encouraged consumers to move up the value chain in several discretionary categories.

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