Nearly all items taxed at 12% are expected to move to 5%, and most goods in the 28% slab are likely to shift to 18%. Analysts note that the reform is aimed at easing household tax burdens and boosting consumption, while also cutting down on classification disputes across product categories.
The Finance Ministry has estimated a revenue impact of about Rs 50,000 crore annually, which brokerages view as manageable. Although the changes could lead to a 0.3–0.4% of GDP impact on collections, surplus cess revenues and compensation measures are expected to partly offset the shortfall.
With this, various brokerage firms have highlighted stocks and sectors that could be potential beneficiaries of these announcements.
Jefferies
Jefferies highlighted that GST on cement, 2-wheelers, and air conditioners could be reduced to 18% from 28%, making these sectors prime beneficiaries. It also flagged the possibility of rate cuts for insurance, hybrid cars, processed foods, garments, and footwear, adding that household budgets are likely to see relief across multiple categories.
Motilal Oswal
Motilal Oswal Financial Services (MOSL) said the reforms are designed to ease household budgets by lowering retail prices by 4–5% for items moving from 12% to 5%. The brokerage expects strong benefits for consumer staples, autos (four-wheelers), cement, hotels (below Rs 7,500 tariff), retail segments such as footwear, durables like ACs, logistics, quick commerce, and electronic manufacturing services (EMS).
The brokerage firm also highlighted key stock picks that may gain from the GST rate cuts, including HUL, Britannia, Maruti, Ashok Leyland, Ultratech, Voltas, Amber, Delhivery, Lemon Tree, Swiggy, HDFC Bank, and Bajaj Finance.
Kotak Institutional Equities
Kotak Institutional Equities suggested that the new GST rates may provide a Rs 2.4 trillion boost, largely benefiting autos and durables. However, it noted that the cement sector may gain less due to low price elasticity, implying that lower GST rates may not translate into a proportionate rise in demand.
Kotak added that companies are mandated under the GST Act to pass on lower rates to consumers, although some may look to raise prices ahead of the GST cuts in late FY26 or FY27. The brokerage also said that while the fiscal impact is notable, it could be balanced by compensation cess, surplus excise collections from oil marketing companies, and reallocation of funds.
Emkay
Emkay Global described the move to a two-tier GST as a positive structural shift but warned that states could face a higher revenue burden. The brokerage expects autos, durables, cement, and allied sectors to be among the key beneficiaries. It added that CPI inflation could ease by 50–60 basis points over a year, which in turn may lift consumption demand.
However, Emkay cautioned that if the government cuts back on capex or rural/social schemes to balance revenue, the gains in demand may be capped. It also reiterated its near-term preference for consumption plays over capex-led themes.
Antique
Antique Stock Broking estimated that the GST rate rationalisation may lead to a 5–6% hit to collections, or about Rs 1.2–1.5 trillion annually, equating to 0.3–0.4% of GDP. Despite this, Antique noted that the reforms are expected to aid select consumption categories the most.
The brokerage added that combined with festive season demand and other economic tailwinds, the GST rate cuts could help drive a second-half recovery in FY26
Also read: Insurance stocks surge up to 5% as Govt to consider GST cut on health and term insurance premiums
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)