Etailers to Benefit from GST 2.0 Reforms as Festive Season Sales Expected to Surge 27%

Ecommerce is expected to see a boost in sales this festive season following new GST relief, which slashes tax rates on popular items like footwear, apparel, and electrical appliances. Online marketplaces like Amazon and Flipkart are preparing for a surge in sales, with Amazon's Great Indian Festival set to begin on September 23. However, food delivery platforms Zomato and Swiggy will bear the cost of 18% GST on behalf of their gig workers, potentially impacting worker payouts.

The Indian government's recent Goods and Services Tax (GST) cuts are poised to boost the ecommerce sector during the upcoming festive season. Effective September 22, 2025, the GST Council implemented sweeping reforms, slashing tax rates on everyday goods and durables, aiming to ease living costs and stimulate domestic demand [1].

The new GST structure consolidates the existing four-tier system into two slabs: 5% and 18%. Everyday items such as toothpaste, shampoo, packaged food, and medicines have been moved to the 5% bracket, while household durables like TVs, air conditioners, cement, and small cars have seen their rates reduced from 28% to 18% [1]. This move is expected to increase affordability and demand, particularly ahead of the festive season.

Major ecommerce platforms like Amazon India and Flipkart are gearing up for a surge in sales. Amazon's Great Indian Festival sale is set to begin on September 23, a day after the new GST rates take effect [2]. The sale will start early for Prime members, and the platform has indicated deals on various categories including footwear, handbags, chocolates, and namkeens, which are now subject to reduced taxes.

Flipkart, another major player, is also preparing for its Big Billion Days sale, although the exact dates are yet to be announced [2]. The GST rate changes are expected to have a significant impact on many goods and services, with food items seeing a tax reduction from 18% to 5%.

However, the new GST rules also present challenges for food delivery platforms like Zomato and Swiggy. The GST Council has clarified that platforms are now liable for GST on local delivery services routed through them under Section 9(5) of the CGST Act [4]. This could lead to an increase in operational costs for these platforms, potentially impacting worker payouts and margins. While the platforms are still studying the notification's full impact, it is likely that the additional cost will be passed on to consumers.

Despite these challenges, the overall impact of the GST reforms on the ecommerce sector is expected to be positive. Analysts forecast a 100–120 basis point boost to GDP, with retail inflation potentially dropping by up to 1.1 percentage points if savings are passed on to consumers [1]. Industry leaders, such as automotive dealers, FMCG companies, and cement and insurance firms, have welcomed the relief, noting it will improve affordability and demand just ahead of the festive season [1].

In conclusion, the new GST rates are expected to drive sales in the ecommerce sector, particularly for online marketplaces like Amazon and Flipkart. However, food delivery platforms may face increased operational costs due to the new GST rules on local delivery services. Overall, the GST reforms are seen as a positive step towards easing living costs and boosting domestic demand.

References:
[1] https://www.khaama.com/india-rolls-out-sweeping-gst-cuts-to-boost-domestic-demand-amid-u-s-tariff-pressure/
[2] https://m.economictimes.com/tech/technology/amazon-indias-great-indian-festival-sale-to-start-from-september-23/articleshow/123697512.cms
[4] https://www.moneycontrol.com/news/business/startup/swiggy-zomato-brace-for-gst-impact-on-delivery-fees-may-pass-cost-to-consumers-13523038.html