The festive season in India is always about new beginnings, celebrations, and—of course—shopping. But what if this Diwali brings not just lights and sweets, but also lower prices on cars, insurance, and everyday essentials?
Reports suggest that Prime Minister Narendra Modi is planning a major GST reform, and the buzz is that this could be a true “GST Dhamaka” for consumers. If approved, this move could directly impact your wallet in exciting ways.
So, what exactly is in the works, and how could it affect you this festive season? Let’s dive into the details.
What’s the Big Plan for Dhamaka GST 2.0?
The Goods and Services Tax (GST), introduced in 2017, was meant to simplify India’s tax system. Over the years, it has done its job, but challenges remain. To fix these, the government is pushing for “next-generation GST reforms” built on three pillars:
Structural Reforms – Fixing problems like the inverted duty structure (where raw materials are taxed more than finished goods).
Rate Simplification – Moving towards a simpler, two-slab system by merging or phasing out slabs like the current 12%.
Ease of Living – Making aspirational and daily-use products more affordable for common people.
The timing is crucial because the compensation cess on luxury and sin goods (like tobacco, coal, and big cars) is set to expire in 2026. This gives the government more flexibility to adjust GST rates without hurting revenue.
What is the Compensation Cess, and Why Should You Care?
The compensation cess is an extra tax introduced in 2017 to help states recover from revenue losses after GST replaced older taxes like VAT.
Initially planned to end in 2022, it was extended till March 2026 due to COVID-19.
Once it expires, the Centre will have greater freedom to tweak GST rates.
For you, this could mean lower taxes on essential items—a direct saving in your pocket.
1. Small Cars Could Become Cheaper
If you’re planning to buy a new car this Diwali, here’s the biggest good news:
Proposal: Cut GST on small cars (under 4 meters, specific engine size) from 28% to 18%.
Impact: Lower prices on popular models from Maruti Suzuki, Hyundai, Tata Motors, and more.
This move could revive the struggling small-car segment, which once held 50% market share but now contributes only one-third.
2. Huge Relief on Insurance Premiums
Insurance is essential, but premiums often feel too heavy on the budget. The new GST plan aims to change that.
Proposal: Reduce GST on health and life insurance premiums from 18% to just 5%, or even grant full exemption.
Impact: Affordable insurance for millions of Indian families, higher insurance penetration, and reduced financial stress.
This could be the government’s biggest “gift of protection” to households this Diwali.
3. Bigger Cars Might Cost More
While small cars could get cheaper, large SUVs and luxury vehicles may see the opposite effect.
Proposal: Introduce a 40% special GST slab for bigger vehicles.
Impact: Instead of the current 50% tax burden (28% GST + up to 22% cess), the system will be simplified into one slab, keeping costs steady but transparent.
When Will You Know More?
The final call rests with the GST Council, where a Group of Ministers is reviewing the proposals. Their decision, expected soon, could mark the biggest GST reform since 2017.
So as you plan your Diwali shopping spree, keep an eye on the headlines. This festive season, the government may not just light up your homes but also lighten your expenses.
Final Thoughts
If approved, this “GST Dhamaka” will be more than just a festive announcement. It could:
Revive the small car market.
Make health and life insurance affordable.
Simplify the tax system.
In short, the reforms could bring real financial relief to millions of households across India.
This Diwali might truly be brighter—both in lights and in savings!
