The overhaul of GST rates is set to bring major relief to buyers of automobiles and consumer durables, while pushing up the cost of expensive garments, IPL tickets and business-class air travel, according to industry leaders and information released by the finance ministry.

Automakers say prices of small cars could drop by ₹45,000-₹50,000, while two-wheelers may become cheaper by around 8 per cent. The biggest gains are expected in entry-level hatchbacks, premium hatchbacks and compact sedans with smaller engines, where GST has been cut from 28 per cent to 18 per cent.

Consumer durables companies estimate the prices of air conditioners and electronics to drop by ₹3,000-₹5,000 if the benefits of a lower tax are fully passed on to buyers.

Producers of branded packaged food and health and personal care products, such as soaps and shampoos, too, are looking forward to passing on the benefits of the rate cut, approved by the GST Council on Wednesday, to consumers by either bulking up the pack or reducing the MRP, with an expected gain of 8-10 per cent for consumers.

“The priority now is to pass on the GST benefits to our consumers as soon as possible so that these benefits translate into greater value for them,” Emami vice-chairman and managing director and FICCI president Harsh Agarwal said.

However, garments priced above ₹2,500 apiece will become more expensive as they will attract 18 per cent tax instead of 12 per cent. The GST rates on business-class air travel will also turn expensive, with the rate going up to 18 per cent from 12 per cent. Moreover, IPL tickets are going to be costlier with tax going up to 40 per cent from 28 per cent.

Car calling

Despite the seeming increase in GST rates from 28 per cent to 40 per cent for mid-sized and big cars, buyers are likely to benefit as the total tax incidence on them is expected to come down because of the withdrawal of cess from September 22.

Analysts at Crisil Intelligence estimated that prices of large sedans and mid-sized SUVs, and MPVs with engine capacity <1,500cc are expected to reduce by about 3.5 per cent, while those of premium SUVs and MPVs with engine capacity >1,500cc are estimated to fall by about 6.7 per cent.

In the case of entry-level hatchbacks, premium hatchbacks, compact sedans with less than 1,200cc petrol or less than 1,500cc diesel engines, prices will drop by about 8.5 per cent as the GST rate will fall to 18 per cent from 28 per cent.

“In the small car segment, if the GST comes down by 10 per cent, the retail price for the customers will come down by 8.5-9 per cent. In terms of quantum, this 9 per cent reduction would account for ₹45,000-₹50,000 at minimum,” said Maruti Suzuki India chairman R.C. Bhargava.

In the case of two-wheelers, prices are estimated to reduce by about 7.8 per cent. However, prices of two-wheelers with >350cc engines will increase by about 6.9 per cent on the back of tax rates increasing to 40 per cent.

According to Rajiv Bajaj, MD, Bajaj Auto, the reduction in GST rates is a “tactical hit but a strategic miss” and an uniform rate would have helped manufacturers scale up.

Electronic hope

Makers of TVs, fridges and washing machines expect a temporary lull in sales, but a pick-up in demand in the second half of the year.

According to Anurag Sharma, MD and CEO of Akai India, the GST rate cut from 28 per cent to 18 per cent on electronics is a “progressive reform” that will make appliances like TVs and air conditioners more affordable, allowing consumers to save ₹3,000 to ₹5,000 onmajor purchases.

FMCG growth

Fast-moving consumer goods (FMCG) firms expect the reforms to play a pivotal role in stimulating economic momentum and supporting long-term growth for the industry.

Dabur CEO Mohit Malhotra said that the reform will make everyday essentials like shampoos and soaps more affordable, demonstrating a strong commitment to inclusive growth and domestic consumption revival. According to Grant Thornton Bharat partner Naveen Malpani, GST rate reductions could lead to price drops of 8-10 per cent depending on brand and supply chain efficiencies.

Retail caution

The apparel industry gave have a mixed reaction to the changes. While the two-slab GST framework and the removal of the inverted duty structure were welcomed, industry association argued that garments priced above ₹2,500, which are subject to a higher GST rate, are also widely purchased by the middle class.