Planned GST changes prompt temporary slowdown in e-commerce purchases

New Delhi: Anticipation around the government’s proposed Goods and Services Tax (GST) reform has led some online shoppers to delay purchase decisions, particularly for consumer goods and electronics, as they wait for clarity on revised rates. Analysts, however, describe the development as a temporary pause, with sales expected to recover once the new structure is confirmed and festive shopping gains momentum.

At present, GST is levied under a four-tier system, with rates ranging from 5% to 28%. The reform being considered by the Centre proposes that most goods would be charged either 5% or 18%. Large consumer durables such as washing machines, air conditioners and refrigerators are expected to fall under the lower band.

The GST Council, chaired by the Union Finance Minister and comprising representatives from all states and union territories, is scheduled to meet on September 3 and 4 to deliberate on the reform. Ahead of the discussions, industry experts note a visible shift in consumer behaviour, especially in higher-value categories.

Naveen Malpani, Partner and Consumer & Retail Industry Leader at Grant Thornton Bharat, said: “The anticipation of revised tax slabs moving from the current four-tier structure to a simplified two-rate system of 5% and 18%, has led to a 'wait-and-watch sentiment among buyers.

Internal estimates suggest a potential 25-30% impact on high-ticket segments like air conditioners and refrigerators if GST clarity is delayed. This cautious approach is driven by consumer expectations of price drops once the new slabs are implemented, likely around Diwali 2025. For instance, a Rs 1.2 lakh smartphone could become 10% cheaper post-reform, prompting buyers to delay their decisions.”

Shubham Nimkar, Research Analyst at Counterpoint Research, echoed this view, pointing to the impact on retailers and platforms: “Retailers are managing elevated inventory levels, while categories such as electronics and appliances are seeing deferred demand. E-commerce majors are already engaging with brands to prepare for a likely surge in demand during the latter phases of the festive season in October, once the revised GST rates are formalised.

The expected changes will also influence pricing strategies, as platforms recalibrate product positioning to reflect the new tax structure. Overall, while the near-term impact is a temporary dip in sales, the market is poised for a sharp rebound once there is clarity on the new regime.”

E-commerce companies are closely monitoring the situation, given that flagship festive sales account for a substantial portion of annual revenues. While the short-term caution has affected sentiment, industry leaders point to the resilience of India’s festive shopping culture.

Saahil Goel, Managing Director and Chief Executive Officer of Shiprocket, described this cultural aspect as a strong counterbalance, “Families plan purchases around festivals, whether it is a new appliance, a gadget, or a home improvement. This underlying demand remains intact, and if anything, GST rationalisation will only serve as an added incentive for consumers to buy more confidently. The deduction in slabs is a plus, it improves affordability, broadens access, and strengthens purchasing power at the right time of the year.”

Rajneesh Kumar, Chief Corporate Affairs Officer at Flipkart Group, characterised the reform as a transformative step, “GST rationalisation as a structural reform that will give a strong boost to consumption, energise festive demand, and support India’s growth story.”

Despite the current lull, projections for the festive season remain optimistic. Malpani expects a 15–20% increase in e-commerce sales once the revised regime is in place, particularly across electronics and quick-commerce platforms. He noted that the rebound will be supported by consumer confidence, simplified compliance and increased affordability.