The recast of goods and services tax (GST) rates on Wednesday exceeded expectations in select product categories, but the markets had priced in most positives ahead of the outcome, suggest analysts.

Once the GST-triggered euphoria settles, analysts believe the markets will start to focus on India Inc’s earnings trajectory and developments on the US tariff front.

The 56th Goods and Services Tax (GST) Council meeting, chaired by Finance Minister Nirmala Sitharaman, announced on Wednesday that GST rates will be reduced to 5 per cent and 18 per cent. Most of the items useful for common man have been moved to 5 per cent slab.

"These reforms have been carried out with a focus on the common man. Every tax on the common man's daily use items has gone through a rigorous review, and in most cases, the rates have come down drastically..", the Finance Minister said.

Senior Congress leader and Rajya Sabha MP P Chidambaram has welcomed the GST Council's rate rationalisation and rate cuts, while criticising the timing of the reforms as being “8 years too late".

In a post on X late Wednesday, the former Union finance minister said the current GST design and rates should not have been introduced in the first place.

GST rationalisation is likely to boost demand in the auto sector where entry-level buyers have stayed away since the pandemic due to steep rises in automobile prices and subdued income growth.

While small cars are the biggest beneficiaries, larger SUVs are also set to gain as vehicles under four metres will see tax rates slashed from 28 per cent to 18 per cent, and bigger ones will be taxed at 40 per cent.

In a big relief for policyholders, the Goods and Services Tax (GST) on individual health and life insurance premiums has been slashed to zero. The decision was made during the 56th GST Council meeting held on Wednesday and will come into effect from September 22, 2025.

This means the 18 per cent GST that is currently added to your insurance premium will no longer apply. The change is expected to directly reduce the total amount paid by consumers, making insurance more affordable for individuals and families.

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