Online Shoppers Press Pause Button Ahead of GST Changes; Festivities to Boost Sales: Analysts

The planned GST changes have prompted some e-shoppers to postpone purchase decisions in hopes of lower taxes on certain products like consumer goods and electronics, say analysts, while emphasising that the blip is only temporary and sales are set to rebound as clarity improves and festive fervour takes hold.

Goods and services are currently charged under a four-tier system with rates ranging from 5% to 28%.

GST reform, proposed by the Centre, says that most goods will be charged at either 5% or 18%. Durables such as washing machines, air conditioners and refrigerators will be among the goods charged lower rates under the new GST regime.

The GST Council, chaired by Union Finance Minister and comprising ministers from all states and UTs, will meet on September 3 and 4 to discuss the reform.

As the industry prepares for the rollout of GST 2.0, the e-commerce sector is witnessing a noticeable shift in consumer behaviour, particularly around high-value categories such as electronics and appliances, said Naveen Malpani, Partner and Consumer & Retail Industry Leader, Grant Thornton Bharat.

"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 ₹1.2 lakh smartphone could become 10 per cent cheaper post-reform, prompting buyers to delay their decisions," he said.

Shubham Nimkar, Research Analyst at Counterpoint Research, corroborated the wait-and-watch situation.

"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 formalized.

“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," he said.

E-commerce platforms, whose flagship sales in the festive season contribute a significant quarter of their annual revenues, are aware of the impact these potential tax changes could have on their sales strategies.

However, the industry believes that despite this immediate caution, the inherent strength of India's festive shopping culture is a powerful counter-narrative.

Shiprocket MD and CEO Saahil Goel said festive shopping in India is both cultural and emotional.

"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," he said.

Rajneesh Kumar, Chief Corporate Affairs Officer at Flipkart Group, views 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, the outlook remains upbeat. Malpani projects a 15–20% surge in festive e-commerce sales once the reforms are enacted, especially in electronics and quick-commerce platforms.

This rebound, he explained, will be driven by enhanced consumer confidence, simplified compliance, and increased affordability.