Gross GST collections have stayed above the Rs 1.9 lakh crore mark in recent months, rising 14.8% year-on-year to nearly Rs 2 lakh crore in August 2026. Domestic GST revenue rose 9.3% during the month, while the April-June quarter had already seen gross collections rise 8.4% to Rs 6.32 lakh crore. The numbers do not measure consumption directly, and import taxes have contributed significantly to the recent rise, but they point to economic activity holding up even as consumers navigate higher costs and geopolitical uncertainty.
The interesting part, however, is what Indians are doing with that spending power.
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The GST rate cuts were expected to make everyday purchases and big-ticket products more affordable. A year on, the impact appears to be less about Indians simply buying more of everything and more about what they choose to buy. Two-wheeler users are moving up to cars, television buyers are opting for larger screens and better technology, while consumer-goods companies have seen an initial improvement in volumes. In other words, the tax cut appears to be changing the composition of consumption, even where it has not produced a proportionate increase in units sold.
From two-wheelers to cars: GST changes the upgrade equation
Automobile dispatches have remained particularly strong. Passenger vehicle dispatches hit a record 12.7 lakh units in April-June 2026, rising 25.9% from a year earlier, while two-wheeler dispatches climbed 20.3% to 56.3 lakh units, according to the Society of Indian Automobile Manufacturers (Siam), as reported by The Times of India.
The numbers, however, refer to supplies from manufacturers to dealers and not direct purchases by consumers.The recovery is also changing the profile of buyers. First-time car buyers are returning to the market in larger numbers, with lower taxes reviving demand for entry-level passenger vehicles. Carmakers have also seen stronger contributions from first-time buyers and growth in entry-level SUVs.
Also Read: First-time car buyers make a comeback as lower GST boosts small-vehicle demand
The GST overhaul, along with easier financing, has helped improve affordability. ET had earlier reported that vehicle registrations, a proxy for retail sales, rose 7.7% in calendar 2025, with passenger vehicle registrations up 9.7% and two-wheeler registrations rising 7.2%.
TV buyers are buying bigger, not necessarily more
The shift is not limited to cars.
Television buyers are increasingly opting for larger screens, suggesting that lower taxes are encouraging consumers to trade up rather than simply buy more units. Smart TV shipments grew 10% year-on-year in October-December 2025, according to Counterpoint Research, before declining 3% in January-March 2026.
Within the category, TVs of 55 inches and above were the fastest-growing segment in the March quarter and accounted for nearly a third of shipments.
Intex Technologies director Keshav Bansal told The Times of India that the GST cut had created “a meaningful affordability window” for larger televisions.
Intex’s consumer durables business grew 80% in FY26, with smart TVs among the drivers. But Bansal said the increase was not purely a volume story.
“Unit volumes have not risen in proportion to value growth; the more significant shift has been in product mix,” he said, with consumers opting for larger screens and better technology.
ET had reported soon after the GST overhaul that the tax cuts were accelerating premiumisation across categories. Companies saw stronger demand for 55-65 inch televisions, five-star air conditioners and higher-end cars, while entry-level products remained relatively flat.
The GST boost meets a geopolitical speed bump
The television recovery, however, has since hit a speed bump. Counterpoint’s tracker recorded a 9.8% year-on-year fall in TV shipments in April-June, amid uncertainty following the February 28 launch of Operation Epic Fury by the US and Israel against Iran.
The cost side has also started eating into the benefit of lower taxes.
Bansal said rising input costs, including memory chips used in televisions, and the expense of complying with newer energy-efficiency norms for air conditioners had absorbed part of the GST benefit. Lower GST had supported AC demand alongside a favourable summer and a low base.
Lower GST helps, but input costs are fighting back
Liberty Shoes executive director Anupam Bansal said the tax reduction remained positive over the longer term, particularly as consumers shift towards branded products.
“In the long-term, it is definitely a positive, especially with people looking to move to branded products. But there is some impact in the short run due to the recent increase in input prices. Also, full refund of input tax credit will help in offsetting some of the cost,” he told The Times of India.
FMCG sees an early lift, then a reality check
The picture is similarly mixed in fast-moving consumer goods.
FMCG companies initially reported a pickup in volumes after the GST changes. In February, as reported by ET, consumer goods makers were seeing signs of a turnaround from December, after several quarters of subdued demand. Companies expected easing inflation and lower GST rates to shift growth from price-led gains towards volumes.
Nestlé India, Hindustan Unilever, Marico and Dabur were among companies that reported signs of improving volume growth.
But the benefits have not been uniform. ET had reported that consumers initially directed their savings towards bigger-ticket purchases such as cars and consumer durables, where the tax benefit was more visible, rather than everyday products such as biscuits, soaps and shampoos.
That has left the consumption story at an interesting juncture. The GST cuts appear to have unlocked some pent-up demand and encouraged consumers to move up the value chain in several discretionary categories.
