The government’s GST 2.0 reform simplifies tax slabs into 5%, 18%, and 40%, reshaping how luxury goods and essentials are taxed.
PwC finds that the changes will ease household budgets significantly by reducing tax “burden” on everyday consumer items.
Luxury and premium segments like smart tech, high-end vehicles expected to see cost increase under the 40% de-merit catego
ry.
Simultaneously, essentials and merit items benefit under the 5% rate, giving lower-income and middle-tier consumers relief.
The changes also lead companies in wealth planning, insurance, and premium markets to reassess their product positioning.
There is optimism that consumption demand will get a boost, especially ahead of the festive season.
However, segments in the luxury and sin goods categories may face squeeze due to the high de-merit r
ates.
Policymakers aim that easier compliance, clearer taxation will reduce friction for both consumers and businesses.
The reforms are part of a broader strategy to support domestic demand amid external headwinds and trade tensions.
Investors are watching how these shifts affect sectoral earnings, especially in autos, FMCG, insurance, and luxury
.