From September 22, Indian families are set to see reduced expenses on groceries, insurance, clothing, cars, and several other essential and lifestyle products—provided companies pass on the benefit of the revised Goods and Services Tax (GST) rates to consumers.
The government’s GST overhaul is designed to stimulate consumption ahead of the festive season. However, financial experts advise families to channel part of their additional savings into investments rather than spending it all on discretionary purchases. Increasing contributions to systematic investment plans (SIPs) in mutual funds, international funds, or gold ETFs could help households build long-term wealth.
Key Highlights
- GST 2.0 slashes tax slabs, boosting consumer savings from essentials and durables—ideal time to invest.
- Simplified GST structure frees up festive-season savings; middle-class households urged to boost investments wisely.
Estimated Savings for Families
According to Taxconnect Advisory Services Partner Vivek Jalan, a household with a monthly budget of ₹80,000 could save around ₹1,639 per month after the GST changes. For example, food and grocery expenses of ₹20,000 may drop to ₹18,750, while life and health insurance premiums could decline from ₹3,348 to ₹2,837.
Similarly, a family with a ₹3 lakh monthly budget could save nearly ₹4,000, while households with ₹10 lakh monthly expenses might save up to ₹11,400. The extent of savings depends on spending patterns across categories such as food, insurance, clothing, and miscellaneous expenses.
Key Categories Affected
Most food items are shifting from the 12% GST slab to 5%, resulting in meaningful reductions in grocery bills. All life and health insurance premiums will become GST-exempt, lowering policy costs. On the other hand, certain clothing items priced above ₹2,500 will attract 18% GST, slightly offsetting gains. Passenger transport services like air economy travel and car hires will also see higher rates, moving from 12% to 18%.
Prudent Use of Savings
While lower costs will provide relief to households, financial advisors caution against unnecessary purchases. “If your spending budget was ₹100 and the same products now cost you ₹90, you don’t need to use the extra ₹10 on additional purchases. Logically, that surplus should be invested,” said Pankaj Mathpal, founder of Optima Money Managers.
Experts recommend directing GST-related savings toward equity mutual funds, gold ETFs, or other investments aligned with an individual’s financial goals and asset allocation. Even small, regular investments during this period can accumulate into a significant corpus over time.
Also Read: GST 2.0 May Enrich Consumers Despite Govt's Rs 48,000 Cr Revenue Loss
Festive Season Outlook
The festive season may encourage higher spending, supported by cheaper goods and attractive offers from brands. However, households are advised to balance celebration with financial prudence—ensuring that savings from the GST cuts contribute not just to short-term consumption, but also to long-term financial security.
