Diwali shopping cart reimagined with GST relief on sweets, ACs and SUVs

GST 2.0: From mithai and jewellery to cars and consumer durables, here's what changes for Diwali buyers

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With Diwali around the corner, the Goods and Services Tax (GST) Council’s decision at its 56th meeting to rationalise tax slabs reshaped the consumers' shopping. These reforms are expected to invigorate festive demand by lowering prices on essential goods, consumer durables, automobiles, and personal care items, areas where gift-giving and seasonal upgrades are common.

 

Lower taxes, mixed with festive sales, translate into more purchasing power for consumers. From mithai boxes and puja samagri to jewellery, appliances, and cars, here's what is likely to be cheaper in your Diwali shopping cart.

 

On September 3, 2025, the GST Council unveiled 'GST 2.0' reforms aimed at simplifying the tax structure just in time for the festive season. The overhaul reduced the GST rate slabs from four tiers to two: 5 per cent and 18 per cent. It also imposed a 40 per cent levy on sin and luxury goods.

 

Diwali shopping basket: What’s cheaper

Sweets & festive food

Food items are among the biggest beneficiaries:

 

Milk products: UHT milk and paneer (pre-packaged) are now exempt (0 per cent), while butter, ghee and cheese move from 12 per cent to 5 per cent.

 

Sweets & chocolates: Sugar confectionery, chocolates, cocoa-based items and ice-cream, earlier taxed at 18 per cent, are down to 5 per cent.

 

Ice cream & cold desserts: Down to 5 per cent from 18 per cent

 

Snacks & namkeens: Bhujia, mixtures, savouries, pasta, biscuits, cakes, pastries and bakery products all see rates reduced to 5 per cent.

 

Dry fruits & juices: Almonds, pistachios, cashews, dried figs, dates and citrus fruits now attract 5 per cent instead of 12 per cent; fruit juices, jams, squashes, and tender coconut water also drop to 5 per cent.

 

For households, this means the Diwali mithai box, dry fruit hampers, and evening snacks will carry a lighter tax tag.

 

Consumer durables: Appliances in the festive cart

Consumer electronics set for a major push include:

• Air conditioners and dishwashers have been cut to 18 per cent from 28 per cent.
• Televisions and monitors, previously in the top bracket, are now at 18 per cent
• This will likely lift consumer durable sales, which peak during Diwali discounts.

 

Other cuts in Diwali shopping cart

Candles & decorative lighting: Candles, handcrafted candles, hurricane lanterns, handcrafted lamps, down to 5 per cent from 12 per cent.

 

Handicrafts & idols: Wooden, stone, brass, ceramic, glass, metal idols and décor down to 5 per cent from 12 per cent.

 

Cosmetics & personal care: Soaps, shampoos, hair oil, toothpaste, talcum powder, shaving cream, down to 5 per cent from 18 per cent.

 

Auto: Small car, compact SUV win

Small cars and compact SUVs (petrol up to 1200cc, diesel up to 1500cc, length less than 4m) shift to 18 per cent from 28 per cent.

 

Three-wheelers and motorcycles under 350cc also move to 18 per cent.

 

The rationalisation is expected to spur demand for entry-level cars and two-wheelers during the festive season.

 

What stays expensive

Sin goods: Tobacco, cigarettes, pan masala, and aerated/caffeinated beverages move to 40 per cent from 28 per cent.

 

Pan masala, gutkha, cigarettes, tobacco products, and bidi will remain under the existing GST and cess rates until compensation cess loans are cleared. The Finance Minister noted the repayment would finish within this calendar year, with the exact date to be announced later.

 

Luxury items: Imported luxury cars, high-end SUVs, yachts, and private aircraft also attract 40 per cent.

 

High-end apparel & quilts: Garments, home textiles above ₹2,500 increased to 18 per cent from 12 per cent.

 

Premium electronics: While TVs and mass durables are cheaper, imported high-end gadgets continue to face higher effective costs due to customs duties, despite GST relief.

 

Alcohol-free beverages: Aerated drinks, caffeinated beverages, fruit-based carbonated drinks, up to 40 per cent from 28 per cent.

 

No change

Gold, silver & jewellery: No rate change noted in the GST document.

Precious metal idols: Remains the same.

 

Insurance relief

The Council has exempted GST on individual health and life insurance premiums, a sharp cut from the earlier 18 per cent. The relief, though not linked to festive shopping, frees up household spending power.

 

Numbers game

Estimated revenue loss: ₹48,000 crore for the Centre and states or 0.13 per cent of GDP

 

Inflation relief: Up to 1.1 percentage points, according to Citi, if cuts are passed to consumers.

 

Why it matters

The GST revamp signals two clear priorities: easing the burden on the middle class and preserving revenue from discretionary and harmful consumption. With festive essentials cheaper, consumer durables more affordable, and entry-level cars within reach, household budgets can stretch further this Diwali.

 

Why festival season matters to India’s retail sector

Festival season is crucial to India's retail sector. Navratri, Dussehra, and Diwali together account for a large chunk of annual sales for retailers. For FMCG, apparel, jewellery, automobiles, and consumer durables, this is the single most important sales period of the year.

 

According to Redseer Strategy Consultants, India’s e-commerce sector alone saw gross merchandise value (GMV) of approximately $14 billion during India's 2024 festive season.

 

In the same year, between October 15-30, liquor sales in the national capital saw 38.7 million bottles worth ₹447.62 crore sold.

 

By the end of October, festive shoppers were poised to generate a turnover of ₹4.25 trillion across India, with Delhi alone contributing ₹75,000 crore of the sales.

 

The Federation of Automobile Dealers Associations (Fada) last year had said that festivities traditionally account for 30-35 per cent of total annual auto sales.

 

Bottom line

The GST Council’s latest rate cuts deliberately align with India’s festive season, which is the most important sales window for retail, autos, and e-commerce, and cheaper GST rates are expected to unlock consumption, support GDP growth, and ease inflationary pressures.