GST slab and rate rationalisation as well as the process improvement is a step in the right direction. The Diwali gift of Rs 48000 crore is fiscally manageable
FinTech BizNews Service
Mumbai, September 4, 2025: The spokesmen of Kotak Mahindra AMC and Kotak Securities welcome the GST 2.
Nilesh Shah - MD - Kotak Mahindra AMC on the latest GST announcement:
The GST slab and rate rationalisation as well as the process improvement is a step in the right direction. The Diwali gift of Rs 48000 crore is fiscally manageable. Completing two days GST council meeting in one day does show the urgency. While the leakages and fraud of GST needs to be dealt with iron hand, process improvement should be a continuous affair with feedback loop.
Savings misallocation happening through F & O speculation and Ponzi schemes making Indians quick money addicts costs more than four times the GST gift.
Rationalisation of GST will partially help offset the adverse impact of US tarriff in the quarters to come
GST slab consolidation and rate rationalization is “ek teer kai nishaan”
The latest GST announcement lowers inflation, increases growth, boosts consumer sentiment, doesn't disturb path of fiscal consolidation, improves ease of doing business and partially offers adverse effects of tariffs.
Shripal Shah, MD & CEO, Kotak Securities shares his thoughts on GST rate cut and its impact on the capital market.
The GST rate cuts come at the right time which is just ahead of the festive season and against the backdrop of US tariff tiffs. Lower taxes on essentials, FMCG products, autos and cement will leave consumers with more money in hand. This should directly boost demand, help traders and businesses see higher volumes, and may even favourably impact next quarter’s earnings. It also carries the potential to ease inflation. The key will be how quickly companies pass on the benefits to customers and if done well, this move can lift both sentiment and spending.
Arun Agarwal, VP Fundamental Research, Kotak Securities on the impact of GST Rate cut on the Auto Sector:
The GST council has approved and reduced GST rates across automobile segments, except for more than 350 cc two-wheeler segment (GST rate has increased for above 350 cc). For Electric Vehicles , GST rates remain unchanged at 5%. Assuming a full pass-through, the on-road price reduction for two-wheelers (<350 cc), three-wheeler, commercial vehicle and tractors could be in the range of mid-to high single digit. For the passenger vehicle segment, the on-road price reduction may be low-to-high single digit, depending on models.
Lower prices would likely stimulate demand recovery across segments, and the impact is expected to be more in the mass-market categories. Auto components players having higher domestic exposure will benefit from stronger OEM demand. Export dependent players will likely see limited benefits.
Amit Agarwal, SVP- Fundamental Research, Kotak Securities on the consumption sector:
GST rate cuts augur well for consumption: The GST council has approved GST rate rationalization to a two-rate structure (standard rate: 18%, merit rate: 5%) from a 4-rate structure (5%, 12%, 18%, 28% + cess) and introduced a special de-merit rate of 40% for select goods/services (cigarettes, CSD). The GST rate for almost all food items (biscuits, instant noodles, nutrition, namkeen, instant coffee, chocolates, ice cream, fruit juices, sauces and cheese) has been cut to 5% from 18%/12% and that for select daily essential personal care categories (soaps, shampoo, hair oil and toothpaste) has been reduced to 5% from 18%.
The sharp, broad-based reduction in the GST rates of most food and key personal care categories could revive consumption partially. Easing commodity prices (tea palm, coffee), good monsoon, favorable base for urban consumption, the recent personal income tax reduction and the upcoming pay commission augur well for FMCG consumption in the next 12-15 months. Lastly, this GST-rate cut would offer some headroom for price increases in the medium term (2HFY27/FY2028).
