How Much Will You Actually Save With GST 2.0?

Have you ever gone to PVR and bought a tub of popcorn and a Coke and worked out thinking? “Yeh bill toh pura dinner ka aa gaya”? That's just GST quietly sitting in your bill, or when you order something from Zomato or even pay for your Netflix on Spotify plan, GST is still there, small on each item, but everywhere you look. It’s the silent +1 on every bill that you don’t notice until the waiter hands you the total.

And that's why it matters more than you think, while income tax feels like a big burden because it shows up directly on our paycheck. The truth is that GST affects almost everyone in India, every single day.

Why GST Matters More Than Income Tax

Only about 6% of Indians actually pay income tax, but GST touches nearly every rupee we spend. Whether you want ₹20,000 a month or ₹2 lakh, whether you are a student ordering Maggi from Blinkit or a person buying a new phone, GST is built into the price.

This is the reason why GST collections are usually 2 to 3 times higher than the income tax collections. It's not one big tax you see at once, yet it is one of the biggest ways the government earns money. If you spend, you pay. 

Why the Government Cuts GST (and Not Income or Corporate Tax)

If the government wanted to give people some relief, they could have reduced income tax or corporate tax, but instead, they focused on GST. Why?

Because of something called the multiplier effect, in simple words, it shows how much the economy grows when the government cuts a particular tax.

• If GST is cut, the economy grows by about ₹1.08 for every ₹1 of tax reduced
• If income tax is cut → only about ₹1.01
• If corporate tax is cut → about ₹1.02

So reducing GST gives the biggest boost to growth. Every rupee not collected from GST helps the economy move a little faster.

How India’s GST Slabs Changed

Before GST 2.0, we had four slabs 5%, 12%, 18% and 28%. Many felt that it was too complicated. Most countries either run one slab or at most two slabs. 

Now India has simplified it into:

• 5% (basic items)
• 18% (standard rate on most goods and services)
• 40% (sin goods like cigarettes or luxury items)

This move makes things simpler for businesses and consumers.

Why Were the 12% and 28% Slabs Removed?

The 12% and 28% slabs were removed because the 12% slab was generating only about 5% of the GST revenue, which was too much effort and too little return. In contrast, the 28% slab yielded about 11% of the revenue, but mostly from luxury and sin goods. 

So instead of spreading it thin, the government pushes them into the 18% or the new 40% slab. And around 65% of GST revenue already comes from the 18% slab alone, so the government keeps it non-negotiable.

What Changed for Indians?

The biggest impact has been on things we all actually use.

• Farm and irrigation items: Earlier taxed at 18% now down to 5%. This matters because higher taxes here directly mean costlier food.
• Stationary items: Pens, notebooks, school supplies, these went from 12% GST to zero tax.
• Insurance premiums: Earlier, life and health insurance had 18% GST, and now it's zero.

If you’re curious about the full list, exactly which goods moved slabs, which stayed untouched, etc., check out this LinkedIn post by Pranjal. It walks through all the changes in one place.

Insurance Premium: The Reality Check

So let's break this noun with an example.

Earlier: If your premium was ₹100, GST added another ₹18, so you paid ₹118.
Now: With GST removed, many people think the premium should just go back to ₹100, but that's not exactly how it works.

Why, because insurance companies don't only collect GST from you. They also pay GST themselves on things like rent, phone, bills, services, and other costs. Let's see those costs add up to ₹50, and the GST on that is ₹9. Earlier, when they charged you at ₹18 GST, they could offset that ₹9 against it, but now with GST at zero, they don't have that option. Their costs rise.

So even if the government slashed GST from 18% to zero, companies address their pricing instead of a full 18% cut in your bill, the real reduction works out to about 7 to 8% cheaper.

That's still good news, but it's less than what headlines make it sound like, and this logic doesn't just apply to insurance. It applies to almost every category where GST was cut. The benefit will be there, but smaller than the tax percentage itself.

Short-term vs Long-term Impact

In the short term, some prices will fall. Every day, price-sensitive products like soap, shampoo, or cement are more likely to pass on the GST cuts because competition forces companies to.

But in the long term, things change. For luxury goods, where prices aren't so sensitive (think iPhones or designer handbags), companies may just keep the benefit and expand their margins instead of lowering prices.

Additionally, the government can monitor companies for a few months to ensure that benefits are passed on, but over time, inflation and business costs typically return. That's why GST cuts may not always feel as big as they sound. 

How This Shows Up in the Stock Market

Now here’s the part investors love to hear.

Whenever the GST is reduced, people end up with a little extra money in their pockets. Their extra cash usually goes into spending, whether it's groceries, travel, or small lifestyle upgrades, and in the stock market, higher spending means higher demand.

When the demand rises, listed companies see their earnings grow for sectors like FMCG or consumer durables. Even a small bump in sales can make quarterly results look better. Stronger earning naturally pushes up valuation, and investors find a reason to drive stock prices higher.

So overall, the GST acts like a positive signal for the market; they don't remove volatility completely, but they do give both businesses and investors a boost of confidence.

More disposable income ➡️ more demand ➡️ healthier company numbers ➡️ stronger stock market sentiment.

Wrapping Up

GST is something we all pay every day, whether we notice it or not, from groceries to streaming bills. Every small cut adds up. The latest changes might not make things drastically cheaper, but they do give a little breathing room on essentials and slowly help the economy move faster.

Over time, these cuts can mean more spending, stronger company earnings, and a healthier stock market. It's not about big promises, just small steps that quietly shape how much we spend, save, and even invest.

So the next time your Blinkit bill feels lighter, thank GST 2.0.