Union Finance Minister Nirmala Sitharaman on Saturday said the government has been closely monitoring prices of 54 consumer goods since the goods and services tax (GST) rate cuts took effect on September 22, and that the benefits of lower taxes have reached consumers across the board — with the exception of Portland Pozzolana cement (PPC), where the reduction has been slightly below expectations.
“Since September 22, we have been getting inputs from zonal formations on 54 items to ensure that the tax benefit is reaching the end consumer. Not even in one item has the benefit not been passed on,” Sitharaman said at a press conference on the GST Bachat Utsav in the capital. “There is, however, one variety — the Portland Pozzolana cement — where the expected rate of passing on is less than anticipated.”
She said this marginal deviation was due to cases where input taxes remained higher than output rates, leading to small adjustments before products reach consumers. “Where it is expected to have 10 percentage points going as a benefit, it might end up having 8.25 per cent being passed on actually,” she explained.
The finance minister said that field reports from 21 zones confirmed widespread price transmission for milk and milk products, shampoos, talcum and face powders, clinical diapers, kitchen utensils, and household metalware.
“For shampoos, the rate came down from 18 per cent to 5 per cent. The expected weighted average reduction was around 11 per cent, but the actual decrease in retail prices has been 12.36 per cent,” she said. Talcum powders saw an 11.77 per cent drop, face powders 12.22 per cent, and clinical diapers — which moved from 12 per cent to 5 per cent — showed a 10.38 per cent fall against an expected 6.25 per cent.
Similarly, tableware, kitchen, and household articles made of iron, steel, and copper, as well as utensils, showed a 10.24 per cent price cut, significantly higher than the 6.25 per cent expected from the tax reduction. Toys such as tricycles, scooters, and pedal cars, which also moved from 12 per cent to 5 per cent, showed a price fall of 8.93 per cent — higher than the expected weighted average of 6.25 per cent. Solar cookers have seen a 6.96 per cent decrease, while umbrellas, including walking-stick and garden types, registered a 9.19 per cent drop in prices.
Sitharaman said rate cuts have boosted demand across sectors, with automakers and consumer durables companies reporting record sales since the announcement. Three-wheeler dispatches grew 5.5 per cent year-on-year to 84,077 units, two-wheeler sales reached 21.6 lakh units, and passenger vehicle dispatches touched 3.72 lakh units in just nine days after the September rate cut. Tractor sales more than doubled to 1.46 lakh units during the month.
Consumer durable retailers also reported strong gains. Vijay Sales saw more than a 20 per cent rise in sales in September, while a major TV manufacturer noted a 30–35 per cent surge in demand for 43-inch and 55-inch models. LG Electronics India said it saw “exponential growth” in sales during the Navratri period.
“These numbers show that the rate reduction is actually reaching the common people,” Sitharaman said, adding that the finance ministry has compiled zone-wise data showing consistent price transmission across all monitored categories.
The government’s decision to cut GST rates under GST 2.0 reflects India’s fiscal strength and its intent to pass on the benefits of buoyant tax collections to consumers, Sitharaman said. The decision followed sustained improvement in revenue collections.
“Better collections mean you have greater fiscal room to give back something,” she said, adding that the government is using buoyant revenues to make the tax system “more nimble” and ensure that consumers directly benefit from India’s strong economic fundamentals.
With GST revenues consistently nearing ₹2 lakh crore a month, Sitharaman said the government has space to pass on gains to consumers, which in turn fuels consumption and investment. “Tax reduction leading to better consumption and greater demand moves further for greater capacity increase by people who sell commodities. From there it increases investment,” she said, calling it part of a “virtuous cycle” of growth.
Commerce and Industry Minister Piyush Goyal said GST collection data for September — based on transactions in July — further confirms the economy’s resilience. Collections for September 2025 grew 9.1 per cent year-on-year, reflecting strong trade activity in August.
“Even in August 2025, after the Prime Minister announced on August 15 that from Diwali there will be lower GST on almost every item, our trade in goods and services was 9.1 per cent higher than last year,” Goyal said. “This demonstrates that India is resilient, India has clarity in its vision, and continues to purchase goods and enjoy services even after the announcement.”
He added that investor sentiment mirrored this optimism. “In August, the outward foreign portfolio investment (FPI) was about $4 billion. As soon as the GST announcement came, investors realized this is a bonanza. In September, outward FPI fell sharply to less than $900 million,” Goyal said, noting that domestic investors absorbed earlier foreign withdrawals.
Despite global headwinds, Goyal said India remains an “oasis in the world’s growth story,” adding that “good economics and good politics can work hand in hand.”
He said India’s exports grew 6–7 per cent in the first half of FY26, with merchandise exports showing positive momentum. “There is resilience, confidence, and demand for our goods and services across the world,” he said.
Sitharaman said the government’s focus remains on ensuring that the benefits of stronger revenue mobilisation reach citizens while continuing reforms to simplify the GST structure and remove duty inversions.
She dismissed suggestions that the latest GST rate rationalisation was a “course correction,” asserting that the Modi government has steadily lowered tax rates as collections and compliance improved.
“This is no course correction. The correction, if they call it that, is actually a reduction in rates so that people get the benefit. Once collections improve and the tax net widens, you are able to give the benefit back,” she said, adding that Congress critics “should be tutored by former finance ministers to understand what it means for tax to come down.”
She clarified that agricultural equipment and MSMEs are among the key beneficiaries of the new rate structure. The GST on certain agricultural diesel engines used in tractors has been cut from 18 per cent to 5 per cent, and hydraulic pumps for tractors from 18 per cent to 5 per cent, she said.
“MSMEs, which create jobs, will benefit both from lower input costs and rising consumption, as their output is now taxed at a lesser rate,” she added.
Sitharaman said the reduction in GST rates should not be viewed as a “revenue loss” but as a “revenue impact” that will be offset by higher consumption. “If you cut tax, people tend to buy more. So the so-called cut will be more than offset by additional consumption. It is not a loss, but a revenue impact,” she said.
Among sectoral beneficiaries, Sitharaman highlighted hospitality and tourism, where GST on room tariffs up to ₹7,500 has been cut from 12 per cent to 5 per cent (without input tax credit). She cited industry estimates that the measure would translate into a 7 per cent effective tax relief for travellers and boost the mid-market travel segment during the festive and wedding season.
“The reduced GST has already started fueling positive sentiment and momentum in bookings,” she said, quoting the Hotel Association of India.
She further announced that a key procedural reform — 90 per cent automated refund for inverted duty structure claims — has been operational since October 1, 2025. “From October 1, the 90 per cent automated refund without any questions has been implemented. The remaining 10 per cent will go through verification,” she said.
Sitharaman said it would be premature to assess the fiscal impact immediately, noting that the full effect of festive-season consumption will only be visible by mid-January 2026. “The party is not yet over… the festival season continues till Shankranti, which is the middle of January. Only then will we get the full consumption and revenue figures,” she said.
Union Minister for Railways, Information & Broadcasting, and Electronics & IT Ashwini Vaishnaw said the current festive season has witnessed record-breaking sales across electronics and home appliances, reflecting rising consumer confidence following the GST rate cuts. Retail chains have reported a 20–25 per cent increase in sales compared to last year, with high-end products such as 85-inch televisions sold out and strong demand for smartphones, washing machines, and air-conditioners.
Vaishnaw said GST reforms have brought “structural stability to the economy, particularly benefitting middle-class households by moderating food inflation.” He noted that food prices have shown a deflationary trend of around 2 per cent for four consecutive months, helping sustain purchasing power.
He added that the surge in demand has translated into double-digit growth in India’s electronics manufacturing sector, creating employment for over 25 lakh people nationwide. India has also surpassed its neighbouring country in smartphone exports to the U.S., with a major global brand now producing 20 per cent of its global output in India, underscoring the country’s rise as a manufacturing hub.
Vaishnaw highlighted that two semiconductor plants — CG Semi and Kaynes — have begun production, marking a milestone in India’s journey towards chip self-reliance. He said GST reforms have strengthened the link between consumption and investment, with overall consumption rising nearly 10 per cent this year, equivalent to ₹20 lakh crore in additional spending.
