By Lal Singh The Goods and Services Tax (GST) was introduced in India on 1st July 2017 as one of the biggest tax reforms in the country. It replaced multiple indirect taxes like VAT, excise duty, service tax, etc., with a single tax regime, making the taxation system simpler and more transparent. While GST has brought many changes for businesses and the economy, its direct and indirect impact on consumers is equally significant.
In 2025, after almost eight years of implementation, let’s explore how GST continues to impact Indian consumers — in terms of prices, consumption patterns, transparency, and overall economic benefits.
1. Simplification of Tax Structure for Consumers
Before GST, consumers paid different taxes at various stages — such as VAT on goods, service tax on services, and octroi at checkpoints. These were often hidden in the price. After GST, all these taxes were combined into a single tax structure: CGST (Central), SGST (State), and IGST (Interstate).
This increased price transparency for consumers. Now, they can see the exact GST percentage on the bill, whether they’re buying a product or availing a service. This has helped build trust and awareness about how much tax they’re paying.
2. Impact on Prices: Mixed Effects
The effect of GST on prices depends on the type of goods or services:
- Essential goods (like fresh vegetables, milk, grains) are taxed at 0% — meaning no burden on consumers.
- Standard goods and services attract GST of 5%, 12%, or 18%.
- Luxury goods and sin goods (like tobacco, high-end cars, ACs) are taxed at 28%, sometimes with a cess.
Examples (2025 rates):
- Packaged food: 5%
- Mobile phones: 18%
- Personal care items (like shampoo): 18%
- Air conditioners: 28%
So, while GST has reduced prices for some items, it has also increased them for certain categories. Consumers who mainly buy daily-use goods have benefited, but luxury buyers may feel a higher burden.
3. Better Consumer Experience & Faster Services
GST has encouraged more businesses to register under the formal system to claim input tax credit. This has improved:
- Service delivery speed
- Customer support quality
- E-billing and digital payment adoption
With GST filing becoming online, many service providers have become more organized and responsive. This ultimately leads to a better consumer experience.
4. E-commerce Shopping Becomes Transparent
Earlier, online shopping websites had different tax structures depending on the state, which confused many consumers. Now with uniform GST rates, the final price shown during online shopping is the same across India, making it easier to compare and shop confidently.
Also, platforms like Amazon, Flipkart, and Meesho now issue proper GST invoices, helping small business customers and freelancers claim input credit when needed.
5. Increased Awareness About Taxation Among Consumers
GST has made Indian consumers more aware of taxes. Earlier, many people didn’t know they were paying VAT or service tax. Now, GST is visible in every bill — be it restaurants, cab services, online subscriptions, or electronic goods.
Also, consumers can now report businesses that avoid GST or don’t provide bills, thus helping the government reduce tax evasion.
6. GST Council Revisions Benefit Consumers
The GST Council, which meets regularly, has revised rates on many items keeping consumer interest in mind. For example:
- In 2023, GST on packed labelled food items was reduced from 12% to 5%.
- In 2024, rate on LED bulbs and solar water heaters was cut from 18% to 12% to promote energy saving.
These revisions have directly helped reduce costs for end consumers.
7. Limitations and Challenges for Consumers
Despite benefits, there are a few challenges consumers still face:
- Some retailers don’t pass GST benefits to customers and still charge higher MRP.
- Consumers can’t claim input credit, unlike businesses, so they always pay the full GST amount.
- In rural areas, awareness about GST bills and tax rates is still relatively low.
Conclusion
GST has made the Indian taxation system more transparent and uniform, which benefits consumers in multiple ways — from better price clarity to improved product and service quality. While the impact on prices is mixed depending on the goods or services, most essential items are taxed at low or zero rates, keeping common consumers in mind.
Over time, as GST continues to evolve with more rationalized rates and increased digital adoption, its impact on consumers is expected to become even more positive, helping build a tax-compliant and consumer-friendly economy.