Since the introduction of the Goods and Services Tax (GST) in 2017, India has been continuously refining the system to balance affordability, industry growth, and government revenues. The recent GST 2.0 reforms are another significant step in this direction. Electronics—being one of the fastest-growing consumer segments—have seen key revisions in their GST treatment.
While smartphones and laptops remain taxed at 18%, major changes have been made in household appliances and televisions, ensuring that essential goods are no longer treated as “luxury items.”
In this blog, we’ll analyze the impact of GST 2.0 on electronic items, compare old vs. new slabs, and explore what it means for consumers, retailers, and manufacturers.
GST 2.0: The Context
The GST system originally had five slabs: 0%, 5%, 12%, 18%, and 28%. Electronics have generally fallen in the 18% or 28% brackets, depending on whether they are considered necessities or luxuries.
With GST 2.0, the Council aimed to:
- Simplify slab distribution.
- Make essential household appliances more affordable.
- Retain high rates only for luxury electronics.
- Support the “Digital India” and “Make in India” missions.
Old vs. New GST Rates on Electronics
Here’s how the GST 2.0 reforms affect major electronic categories:
- on smartphones GST slab remains same at 18%.
- on latop and tablet GST slab remains same at 18%.
- on Televisions (up to 32”) GST slab remains same at 18%.
- on Televisions (above 32”) GST slab changes from 28% to 18%.
- on Refrigerators, Washing Machines, Air Conditioners GST slab changes from 28% to 18%.
- on Kitchen Appliances (microwaves, mixers, coolers) GST slab remains same at 18%.
- on Luxury Electronics (gaming consoles, home theaters) slab remains same at 28% with no change.
Smartphones: Stuck at 18%
Smartphones are now considered essential in India, with over 750 million active users. Many expected a rollback to 12% GST, but GST 2.0 retains the 18% rate.
Impacts:
- Prices remain unchanged, keeping devices slightly more expensive for budget buyers.
- Entry-level 5G adoption may slow down in rural areas.
- Brands will continue relying on EMI schemes and festive discounts to attract customers.
Industry view: While stability is positive for businesses, the sector had hoped for tax relief to push deeper digital penetration.
Laptops & Tablets: No Change at 18%
With education and remote work increasing demand, the industry had lobbied for a GST cut. However, GST 2.0 keeps laptops and tablets at 18%.
Impacts:
- Prices remain as before—no additional relief for students and professionals.
- Imported high-end laptops continue to remain expensive.
- Demand is steady but may grow slower than expected.
Policy angle: The government may be prioritizing revenue from this fast-growing sector rather than offering tax relief.
Televisions: Big Relief for Larger Screens
Earlier, TVs were divided:
- Above 32 inches 28%
- Up to 32 inches 18%
GST 2.0 eliminates this divide. Now, all TVs fall under 18%, making bigger, smarter TVs much more affordable.
Impacts:
- 40–55 inch smart TVs become 8–10% cheaper.
- Middle-class families can now upgrade to larger screens.
- Boost in demand expected in Tier-II and Tier-III cities.
Industry effect: Domestic and budget-friendly brands stand to benefit most, as affordability meets aspirational demand.
Refrigerators, Washing Machines & Air Conditioners: From Luxury to Essential
One of the most consumer-friendly moves in GST 2.0 is shifting refrigerators, washing machines, and air conditioners from the 28% slab to 18%.
Impacts:
- Prices drop by INR 3,000–INR 7,000 across categories.
- Energy-efficient and smart appliances become more accessible.
- Growing middle-class households are likely to upgrade sooner.
Industry outlook: This change is expected to drive volume growth, especially in semi-urban and rural markets where appliances were earlier out of reach.
Kitchen Appliances
Everyday appliances like microwave ovens, mixers, grinders, and air coolers remain under the 18% slab. While no relief has been granted, at least the government avoided any hikes.
Impacts:
- Demand is expected to continue growing moderately.
- Neutral effect on pricing.
Luxury Electronics: Still at 28%
High-end products like gaming consoles, premium audio systems, and home theaters continue under the 28% slab.
Impacts:
- Industry focus will remain on niche markets in metros.
- Prices remain steep, keeping these products limited to high-income consumers.
Policy reasoning: Retaining the highest slab here ensures the government maintains strong revenue streams from discretionary spending.
Who Gains and Who Doesn’t?
Gainers
- Manufacturers: Higher sales volumes offset lower tax margins.
- Retailers & E-commerce platforms: Demand surge in consumer durables.
- Households upgrading appliances: Cheaper TVs, refrigerators, ACs, and washing machines.
Non-Gainers
- Luxury product buyers: No change at 28%.
- Students & IT workers needing laptops: No relief in device affordability.
- Smartphone buyers: Still paying 18%.
Market Outlook Post-GST 2.0
- Steady Laptop Demand: No relief, but hybrid work and EdTech will sustain steady demand.
- Smartphone Plateau: Retaining 18% may slow upgrades, especially in budget 5G models.
- Smart TV Surge: Affordable large screens will accelerate smart TV adoption, especially in non-metro regions.
- Appliance Boom: With appliances moving to 18%, India could see double-digit growth in refrigerators and washing machines over the next year.
Conclusion
The GST 2.0 reforms on electronic items have brought significant relief to middle-class households by making appliances and large TVs more affordable. However, the unchanged 18% slab on smartphones and laptops means consumers in these categories see no immediate benefit.
For the market overall:
- Government secures balanced revenue while pushing affordability in essentials.
- Manufacturers benefit from volume growth.
- Retailers get higher footfall in durable goods.
- Consumers win in home appliances and entertainment.
While not perfect, GST 2.0 marks a positive step toward rationalization, signaling that consumer durables are now seen as essentials, not luxuries.
click here to know more about GST reforms in detail.