Google

Why the GST Reforms Haven’t Lit up the Markets

/4 min read
magazine-cover-image
This story belongs to the issue:
October 2025
Read Full E-Magazine

This story belongs to the Fortune India Magazine October 2025 issue.

The U.S. President’s tariff salvo and record FPI outflows may have weighed down the impact of the central government’s ‘pre-Diwali’ gift on the markets.

ADVERTISEMENT

Why the GST Reforms Haven’t Lit up the Markets
Donald Trump’s tariff tantrums have overshadowed the GST cheer on D-Street. Credits: Getty Images

IN HIS INDEPENDENCE DAY address from the ramparts of the Red Fort on August 15, Prime Minister Narendra Modi announced what he called a “pre-Diwali” gift: next-gen GST reforms for simplifying the indirect tax structure to boost consumption and ease compliance.

On September 3, the GST Council’s 56th meeting set in motion “GST 2.0”. One of the major announcements was switching from the current four-tier tax structure (of 5%, 12%, 18% and 28%) to two slabs of 5% and 18%, with the special 40% rate retained for luxury and sin goods such as high-end cars, tobacco, and cigarettes. As a result, prices of essential and personal-use items, including hair oil, cornflakes, televisions, and health and life insurance premiums, have seen a significant reduction.