Tanuj Gupta, Director – Sales & Marketing, Thermocool Home Appliances, explains how GST 2.0’s simplified tax slabs could make home appliances more affordable and boost demand across urban and rural India
With the introduction of GST 2.0 on 22 September 2025, India is entering a new era in indirect taxation. The new structure streamlines the previous four-slab system (5 per cent, 12 per cent, 18 per cent, and 28 per cent) into just two fundamental slabs — 5 per cent and 18 per cent — while maintaining a 40 per cent rate for luxury and sin goods. This simplification is expected to have far-reaching implications across sectors, particularly in the consumer durables category, which lies at the heart of both urban and rural household consumption.
Lower GST, Higher Affordability
One of the most significant GST 2.0 reforms is the reduction of the tax rate on essential household appliances such as refrigerators, washing machines, and air coolers — from 28 per cent to 18 per cent. This 10 per cent cut is not merely a numerical change but a strategic effort to enhance consumer affordability and drive demand in a price-sensitive economy.
Lower taxation translates into reduced retail prices, enabling families to purchase quality home appliances more easily. As disposable incomes in many middle-class households remain under pressure, this reduction provides tangible relief and is likely to trigger faster replacement cycles and first-time purchases, particularly in Tier-II and Tier-III cities.
Revitalising Consumer Sentiment and Buying Behaviour
Historically, the high taxation of white goods tended to dampen sales, with consumers timing purchases around festive offers and seasonal discounts. With GST 2.0 moving most durable goods into the 18 per cent slab, buying behaviour is expected to become more consistent — less reliant on external promotions and more driven by value and necessity.
Additionally, with greater price transparency and uniform taxation across states, consumers can expect standardised pricing nationwide, which will further strengthen confidence in both retail and ecommerce channels.
A Boost for Domestic Manufacturing and MSMEs
The ease of tax compliance under GST 2.0 is a major advantage for MSMEs within the consumer durables value chain. Whether it is component manufacturers, plastic moulders, assemblers, or service providers, the new regime simplifies procedural challenges and reduces working capital blockages caused by delayed input tax credit claims.
Smaller players who previously operated informally to avoid complex tax compliance are now more likely to transition into the formal economy. This formalisation will enhance production capacity, quality standards, and market outreach. As a result, local sourcing and backward integration are expected to rise, strengthening the domestic supply chain in consumer durables.
Urban Demand to See an Immediate Uptick
Urban markets — typically the first to respond to tax-linked price adjustments — are already witnessing growing interest in high-end appliances. Early indicators suggest increased store footfall and online enquiries, as buyers compare pre- and post-GST 2.0 pricing.
The anticipated reduction in overall cost of ownership, including after-sales services and extended warranties, is further encouraging urban consumers to make purchases.
Coinciding closely with the festive season, the rollout of GST 2.0 is expected to amplify short-term demand, setting the stage for a strong final quarter of FY2025–26.
Rural Penetration to Gradually Increase
While urban demand is likely to surge immediately, rural markets will see more gradual effects. As supply chains realign to new pricing structures and logistics costs adjust to simplified taxation, affordable appliance solutions will begin to reach deeper rural areas.
Lower indirect costs, coupled with rural-focused financing schemes and energy-efficient products, are expected to make items such as solar-powered refrigerators, compact washing machines, and energy-saving fans more accessible to these markets.
This transition aligns with the government’s broader goals of rural electrification and digital inclusion, transforming durable goods from aspirational luxuries into everyday necessities.
A Win-Win for Consumers and Industry
GST 2.0 represents more than a tax reform — it marks a structural shift towards simpler governance and consumer-centric policy-making. For the consumer durables sector, the reduced tax burden expands the addressable market while promoting innovation, competitiveness, and customer-focused strategies.
As companies and distributors recalibrate supply chains, pricing models, and retail strategies, GST 2.0 provides a solid foundation for sustainable, inclusive growth. With enhanced affordability, improved compliance, and growing consumer confidence, the home appliance industry stands poised to gain significantly — powering homes, lifestyles, and India’s economic momentum.
