Stock market today: The Government of India (GoI) announced the rationalisation of indirect taxes in India after the GST Council meeting on Wednesday. Finance Minister Nirmala Sitharaman made an announcement in this regard and said that a new goods and tax regime will come into effect from September 22, 2025, with three GST slabs: 5%, 18%, and 40%. While making this announcement, Sitharmana said that GST reforms would lead to a GST rate drop on 396 items that would help the common man.
According to stock market experts, the outcome of the GST Council meeting would positively impact the Indian stock market. They are expecting a gap-up opening on Thursday as the GST reforms announced yesterday have the potential to act both as an economic catalyst and as a strategic buffer against Trump’s tariffs.
Impact on the Indian stock market
On how this GST Council meeting outcome may impact the Indian stock market, Sugandha Sachdeva, Founder of SS WealthStreet said, “This GST reform holds the potential to act both as an economic catalyst—by simplifying compliance, lowering costs, freeing up blocked working capital, and boosting consumption—and as a strategic buffer against global tariff shocks at a time when India’s exports are under pressure.”
Seema Srivastava, Senior Research Analyst at SMC Global Securities, said, “The recent GST reforms are expected to have a significant impact on the capital market and various industries in India. The proposed two-slab GST structure, with rates of 5% and 18%, aims to simplify the tax system and reduce compliance burdens. Key sectors that are likely to benefit include: Consumer Goods, Electronics, Automobile Sector, Cement Sector, Retail and Consumer Durables.”
Expecting a gap-up opening on Thursday after the outcome of the GST Council meeting, Seema Srivastava said, “These changes are expected to stimulate consumption, support manufacturing, and strengthen India’s economy. The impact on government revenue and potential challenges in implementation will be crucial to monitor. Overall, the GST reforms are expected to boost economic growth, improve tax compliance, and increase investor confidence in the Indian stock market.”
Can this counter Trump’s tariffs on India?
Whether this GST Council meeting outcome will be able to counter Trump’s tariffs on India, Sugandha Sachdeva of SS WealthStreet said, “This reform holds the potential to act both as an economic catalyst—by simplifying compliance, lowering costs, freeing up blocked working capital, and boosting consumption—and as a strategic buffer against global tariff shocks at a time when India’s exports are under pressure.”
“While tariffs are eroding India’s export strength, GST 2.0 provides a strong domestic demand stimulus, reorienting the economy towards consumption-led growth. Lower consumer prices across autos, FMCG, housing, and rural goods are expected to spur spending ahead of the festive season, while insurance relief provides additional household support,” Sugandha added.
GST Council meeting update
The existing seven-tier system (nil, 0.25%, 3%, 5%, 12%, 18%, 28%) has been streamlined into a three-rate structure effective 22nd September 2025, coinciding with the first day of Navratri:
• 5% on essentials and mass-consumption items
• 18% as the standard rate for most goods and services
• 40% “sin tax” for luxury items, alcohol, and tobacco
GST reforms impact on various sectors
• Automobiles: The sector, already struggling despite the festive season, is set for relief. Small and entry-level cars (≤1200cc petrol, ≤1500cc diesel, length ≤4m) will move from 28% to 18%, sharply reducing costs. Two- and three-wheelers, highly price-sensitive, will benefit substantially.
• Consumer Durables: Products such as air-conditioners, dishwashers, and large televisions, earlier taxed at 28%, have been shifted to 18%, making them more affordable and providing a strong festive demand boost.
• FMCG & Essentials: Items such as toiletries, packaged foods, beverages, bicycles, and kitchenware will now attract 5% GST instead of 18%, significantly reducing household costs and spurring broad-based consumption.
• Education: Items like maps, globes, erasers, pencils, sharpeners, and notebooks move from 12% to 5%, making educational materials more affordable and easing the burden on families.
• Cement & Construction: Cement has been moved from 28% to 18%, a long-standing industry demand. This is expected to lower housing and infrastructure costs, supporting both real estate and government-led infra push.
• Agriculture: Agricultural machinery, including tractors, harvesters, and drip irrigation systems, will now attract 5% instead of 12%, giving a strong push to rural productivity and farm incomes.
• Insurance: A complete GST exemption has been announced for health and life insurance policies, reducing costs for households and boosting financial security.
• Sin Goods: Cigarettes, tobacco, liquor, and high-end luxury vehicles fall into the 40% slab, likely to weigh heavily on these industries and their listed stocks.
Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
