GST rate cut: Consumers preparing to purchase household appliances this festive season are likely to spend less, following a major change in the Goods and Services Tax (GST) structure. The GST Council, in its meeting on September 3, 2025, decided to cut tax rates on key consumer durables, including air conditioners, large-screen televisions, refrigerators, and washing machines.
GST Slabs Restructured
The Council’s decision has effectively scrapped the earlier 12 percent and 28 percent tax slabs, leaving only two slabs at 5 percent and 18 percent. As part of the restructuring, products such as air conditioners and bigger televisions that earlier attracted 28 percent tax will now fall under the 18 percent category. Similarly, items earlier taxed at 12 percent will shift to either 5 percent or 18 percent, depending on their classification.
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Price Cut Impact on Consumers
Industry executives expect the change to directly lower prices across stores. Reports suggest that air conditioners may now become cheaper by around ₹1,500 to ₹2,500 per unit, depending on the model. The reduction is also expected to boost demand, especially for premium and energy-efficient appliances, as buyers may find them more affordable.
Company leaders have welcomed the reform. Blue Star Managing Director B Thiagarajan said the change should be rolled out quickly to benefit consumers. Panasonic Life Solutions India Chairman Manish Sharma estimated that prices could fall by 6 – 7 percent. Meanwhile, Kamal Nandi from Godrej Appliances noted that cheaper air conditioners may push penetration beyond the current 9 –10 percent mark in India, allowing more households to access cooling solutions.
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The revision comes at a critical time for appliance makers, many of whom faced a difficult June quarter. An early monsoon and unexpected rainfall reduced demand for cooling products, with companies such as Voltas, Blue Star, and Havells reporting revenue declines of up to 34 percent in their air-conditioning divisions. The price cut, therefore, is seen as timely support for the industry ahead of the festive buying season.
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The GST overhaul also represents the most extensive rationalisation since the tax was introduced in July 2017, with four slabs: 5 percent, 12 percent, 18 percent, and 28 percent. Policymakers say the two-slab structure will simplify taxation, make consumer goods more accessible, and encourage wider consumption.
The move also fulfils Prime Minister Narendra Modi’s Independence Day announcement, where he had promised a “Diwali gift” through GST reforms. With the festive period approaching, the government’s decision is set to influence household budgets and potentially drive a surge in consumer spending.
