India’s recent Goods and Services Tax (GST) rationalisation is poised to deliver a sizeable boost to e-commerce sales ahead of the 2025 festive season, with industry leaders projecting a 15–20% increase in high-value categories, particularly electronics, appliances and personal gadgets.
According to sector executives, the changes introduced by Prime Minister Narendra Modi’s government are likely to enhance consumer purchasing power during the crucial Diwali shopping window and create positive ripple effects across the FMCG, apparel and domestic manufacturing sectors.

Under the proposed “next-generation” GST reforms, the existing four-tier system (5%, 12%, 18% and 28%) will be replaced by a simplified tax regime comprising:

Products currently taxed at 12% will be shifted to the 5% slab, making basic household items more affordable and freeing up disposable income for discretionary purchases through online and offline retail platforms.

Industry Response

Executives from leading e-commerce and quick-commerce platforms say the timing of the reform could not be more favourable, as festive-season sales typically account for as much as 35–40% of annual online volumes in categories such as apparel, electronics, appliances and gift items.
By lowering tax rates, the government aims to:

• Revive consumption across urban and semi-urban regions

• Strengthen domestic demand amid global trade volatility

• Promote “Make in India” by boosting local manufacturing competitiveness

Tax experts agree. Divya Bhushan, Tax Partner at Ernst & Young (EY) India, notes that the streamlined structure will reduce prices and simplify compliance, making it easier for both small and large sellers to operate via online platforms.

Achal Chawla, Indirect Tax Partner (Consumer Products and Retail) at EY, adds that quick-commerce firms stand to gain significantly, as lower tax rates can stimulate impulse buying and encourage new users to try online services during the festive rush.

Broader Benefits Expected

• Higher consumer confidence ahead of Diwali

• Lower effective pricing in high-value categories (electronics, home appliances, mobile devices)

• Boost in insurance adoption if GST on health and life policies is removed

• Improved cash flow for small businesses via reduced tax rate on petrol and diesel vehicles

• Simpler compliance and upgraded billing systems for both offline and online sellers

The proposed changes are likely to be taken up in an upcoming GST Council meeting, with the government aiming to implement the reforms in time for Diwali 2025.
Industry executives believe that once rolled out, the revised structure will act as a catalyst for digital consumption, expand the e-commerce customer base in tier-II and tier-III regions, and accelerate India’s long-term goal of building a self-reliant, consumption-driven economy.

If you’d like, I can also provide a sector-wise breakdown of expected festive sales growth under the revised GST structure.

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