Under the new regime, a 5% slab will apply to essentials such as medicines, food items, stationery and agricultural inputs. The 18% slab becomes the new standard rate covering most goods and services, including automobiles, consumer durables and digital offerings.
A 40% slab has been introduced for luxury and sin goods such as high-end cars, imported liquor, premium electronics and tobacco.
Sectors that could gain under GST 2.0
Automobiles
Cars and two-wheelers that previously attracted a GST rate of 28% will now fall under the 18% slab. After September 22, major carmakers will cut prices to pass on tax benefits.
Tata Motors and Mahindra have announced reduced prices by up to ₹1.55-1.56 lakh; Hyundai slashed the Tucson by about ₹2.4 lakh; and Toyota dropped the Fortuner by nearly ₹3.5 lakh.
In the luxury space, BMW cut up to ₹8.9 lakh and Mercedes-Benz nearly ₹10 lakh on select models.
Pharmaceuticals and healthcare
Medicines and life-saving drugs have been shifted to the 5% slab. The sector is likely to witness higher sales volumes and wider access to healthcare products.
MSMEs and FMCG
Micro, small and medium enterprises, especially those engaged in everyday consumer goods, stand to benefit. Lower taxes on essentials such as food products, stationery and household items will spur demand. Fast-moving consumer goods companies could see stronger turnover, better inventory cycles and upward revision in valuation multiples.
Retail and e-commerce
Cheaper essentials and durables are expected to drive consumption, especially in Tier-II and Tier-III cities. Big retail chains and e-commerce platforms can use their wide networks to tap this demand. Faster sales and simpler tax rules will help them manage money better and grow steadily.
Sectors likely to lose under GST 2.0
Luxury goods
High-end cars, premium gadgets, luxury accessories and designer products now face a 40% GST slab. This segment may face weaker demand, slower revenue growth, and thinner profits, which could hurt the valuations of luxury brands and their distributors.
Tobacco and sin products
Cigarettes, tobacco products and aerated drinks already faced heavy taxation under the earlier system. With GST 2.0, they are placed in the 40% category. Along with strict regulations, this higher tax burden is expected to further cut consumption and shrink long-term profits. Analysts see weaker cash flows ahead, making these companies less attractive to investors.
Imported brands and hospitality
Imported liquor, premium cosmetics and other global lifestyle goods will get costlier under the higher tax slab. Hotels and restaurants that depend on premium food and beverage sales may see thinner margins as customers spend less on non-essentials. Experts warn this could slow growth and raise doubts about the long-term strength of luxury retail and high-end hospitality.
