One year has passed since the change in Goods and Services Tax (GST) rates. The cut in GST rates initially reduced prices of many products and boosted demand, but rising prices later reduced much of this relief. The prices of many products, from food items to consumer goods and automobiles, have gradually increased. Among the sectors where GST rates were reduced, the automobile sector has been most affected.
After the change in GST rates in the automobile sector, customers initially benefited from lower prices and demand increased. According to the Investment Information and Credit Rating Agency (ICRA), automobile retail sales stood at 29 million units in the 11 months to August 2026, up 20 percent from a year ago. During this period, registration of passenger vehicles increased by 22 percent, two-wheelers by 20 percent, commercial vehicles by 19 percent and tractors by 23 percent.
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increased enthusiasm among people
According to ICRA Senior Vice President and Group Head Jitin Makkar, after the change in GST rates, people's confidence and enthusiasm in purchasing goods has increased in the last 11-12 months. However, according to SIAM data, this increase has also been seen in the dispatches of manufacturers in the last six months. SIAM Director General Rajesh Menon said that the demand environment remains strong. He also mentioned that there was a higher increase than this last year.
Automobile sector is most affected
The initial benefits of GST reduction are clearly visible in the prices of vehicles but after this a decline has also been recorded. After the cut in GST rates, many companies have increased the prices of vehicles. The price of Maruti Alto K10 STD (O) was Rs 4.2 lakh before the change in rates, which has come down to Rs 3.7 lakh after September 22, 2025 and is still at the same level. Whereas the price of Mahindra Scorpio-N Z2 was reduced from Rs 13.9 lakh to Rs 13.2 lakh, but now it has become Rs 13.6 lakh.
What was the impact on everyday things?
The effect of GST cut was visible even in everyday things. After GST on many essential goods was reduced from 12 percent or 18 percent to 5 percent, their prices initially reduced by about 10 percent. But later the cost of raw materials, electricity and delivery of goods increased. Due to this, companies again increased the prices by 6-7 percent. This was also affected by increased inflation due to the ongoing conflict in West Asia.
Will prices increase again?
Mayank Shah, Chief Marketing Officer, Parle Products, said that despite this, customers are still getting a profit of 2-3 percent. However, if the prices of raw materials continue to rise further, companies may increase the prices of goods again around Diwali.
According to consumer sector analyst Ronak Shah, the GST cut for FMCG companies promoted affordability rather than a direct surge in demand. According to him, the GST cut provided some relief against cost increases, but it did not bring any major change in the consumption of the category.
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impact on textile industry
The impact of GST changes in the textile sector was limited. GST on clothes priced above Rs 2,500 has been increased from 12 percent to 18 percent. This has especially affected festive and occasion wear. According to Rahul Mehta, Chief Mentor of Clothing Manufacturers Association of India, the reforms or cuts of GST 2.0 have not had much impact on prices. Rahul Mehta has predicted that the cost of clothes will increase by 8-10 percent this festive season. However, the price increase for consumers may be less, around 5-7 per cent, as manufacturers, brands and retailers can absorb some of the increased costs. Overall, the impact of changes in GST rates in a year was different on different sectors.