Demand for consumer goods may get a boost

The government's proposed reduction in GST rates is expected to give a boost to consumption across mass and discretionary categories after months of sluggish demand.

- Viveat Susan Pinto

While macroeconomic factors and rural momentum have aided sales growth in recent months, the expectation of tax cuts by Diwali have raised hopes of a faster recovery in FMCG and durables, companies and experts said.

Under the proposal, the existing 12% and 28% GST slabs will be scrapped, leaving only the 5% and 18% slabs. Food and beverages currently taxed at 12% could move to the 5% slab if the proposal is formalized, reducing the tax burden on several products such as edible oils, rice, butter, ghee, instant noodles, juices, and dry fruits. Home and personal care items could see limited price benefits since these goods fall under the 5% and 18% tax slabs.