Sectors and Stocks to Benefit from GST Reforms

On Independence Day, Prime Minister Narendra Modi announced the major GST restructuring by Diwali 2025. The reform is expected to streamline the four-tier GST structure into just two slabs, i.e., 5% and 18%. Under this shift, 99% of goods in the 12% bracket may move to 5%, while 90% of items in the 28% bracket may fall to 18%.

In this blog, we’ll know in detail which sectors and stocks can benefit from these GST reforms in the long term.

Newly Formed GST Slabs and Revenue Share

The government has proposed a major change to the GST system. They aim to simplify it by cutting the current four slabs down to two main rates. Essentials and daily-use items will likely be taxed at a standard rate of 5%.

Most other goods and services will fall under an 18% rate. As part of the reform, the existing 12% and 28% slabs will be eliminated. A new 40% slab will be introduced specifically for sin and luxury goods such as Pan masala, gutkha, luxury cars, and online gaming.

Government sources highlight that the new GST rate structure aims to make taxation simpler without affecting overall revenue. The 18% slab, which currently makes up 65 to 67% of collections, while the 5% slab contributes about 7%. The 12% slab, which accounts for 5%, will mostly shift to 5%.

The 28% slab, responsible for roughly 11% of collections, will mostly be removed, as around 90% of items in this category are expected to reduce in rate. To counter any potential revenue loss, a new 40% slab for sin and luxury goods will help the government keep fiscal stability while simplifying the GST framework.

Stocks to Benefit the Most from GST Reforms

Here is the list of key sectors and stocks to benefit the most from these GST reforms or expected rate cuts:

Automobiles

GST rate on cars below 1,200 cc is expected to drop from 28% to 18%. A similar reduction may be possible for hybrid passenger vehicles up to 4m in length, with petrol engines up to 1,200 cc and diesel engines up to 1,500 cc.

Stocks to Benefit: Maruti Suzuki India, Tata Motors, Ashok Leyland, Bajaj Auto, Hero MotoCorp, TVS Motor Company, Eicher Motors, Mahindra & Mahindra, Escorts Kubota

Banks and NBFCs

GST cuts are expected to boost consumption, strengthen household confidence, and fuel credit demand. This will drive growth for lenders focused on consumers and for credit card companies. A buildup of deposits is likely in the second half of FY26.

The EMI obligation for consumer durables should decrease, benefiting NBFC lending in this segment.

Stocks to Benefit: ICICI Bank, HDFC Bank, IDFC First Bank, Bajaj Finance

Cement

The GST cut from 28% to 18% may reduce prices by about 7.5 to 8 percent. However, the impact on volume remains relatively inelastic.

Stocks to Benefit: UltraTech Cement, JK Cement

Consumer & Durables

Most items remain in the 18% slab, but staples benefit from lower raw material GST at 12% and the government’s focus on reviving the segment.

Air conditioners benefit from a lower GST of 18% compared to 28%. Havell’s also benefits since about 24% of its topline comes through Lloyd. A key supplier to AC companies will benefit if the Room Air Conditioner’s (RAC) GST rate drops from 28% to 18%.

Stocks to Benefit: Hindustan Unilever, Britannia, ITC, Voltas, Havells India, Amber Enterprises India

Hotels

GST on room rates below ₹7,500 can drop from 12% to 5%. Indian Hotels is likely to gain from Ginger, which has a sub-₹7,500 average room rate inventory.

Stocks to Benefit: Lemon Tree Hotels, Indian Hotels, Chalet Hotels

Insurance

Senior citizens’ policy premiums currently attract 18%. However, there is a possibility that this may be reduced to 5% to 12% if the exemption is completely removed. If that happens, health insurers and term life-heavy insurers can benefit.

Stocks to Benefit: Niva Bupa Health Insurance Company, Max Life Insurance, HDFC Life Insurance, Star Health Insurance

Logistics and Quick Commerce

Delhivery is in a strong position to benefit from the expected increase in volumes for categories such as consumer durables and electronics. These areas make up a large part of its business.

The quick commerce segment is likely to thrive due to growing demand for consumption. A significant portion of orders will be fulfilled through this fast-delivery channel.

Stocks to Benefit: Delhivery, Eternal, Swiggy

Footwear

Footwear companies could benefit as mass footwear, priced below ₹1,000, earlier moved from 5% to 18%. It may return to a lower GST slab, which would reduce tax differences and favor organized players.

Stocks to Benefit: Relaxo Footwears, Bata, Metro Brands, Campus Activewear

Conclusion

GST reforms and rate reductions are expected to significantly strengthen the Indian market in the face of tariff uncertainty. In the long run, these adjustments can reduce costs, promote spending and consumption, ease tariff pressures, and boost GDP growth and production.

These policies, which emphasize structural reforms, rate adjustments, and bettering everyday living, are likely to help the economy as a whole. These reforms could increase India’s GDP growth by 50 to 70 basis points and are predicted to create an estimated demand boost of ₹2.4 lakh crores.

Are you bullish on these GST reforms? Open a free Demat account with SMC Global Securities today and start your journey.

Author: All Content is verified by SMC Global Securities.