GST Reforms and Festive Demand to Boost Food Delivery and Q-commerce

Analysts expect a boost in food delivery and quick commerce growth driven by recent GST reforms, higher discretionary spending, and a pickup in consumer confidence. The festive season could provide an added boost to demand. GST rationalization is expected to unlock momentum in discretionary spending, particularly in food services and quick commerce. However, analysts caution that the benefits may not be uniform and that the inclusion of delivery services under GST may lead to higher delivery fees on most apps.

Analysts are optimistic about the potential growth in food delivery and quick commerce sectors, driven by recent GST reforms, increased discretionary spending, and a pickup in consumer confidence. The festive season is expected to further bolster demand in these areas.

The Goods and Services Tax (GST) Council's recent reforms have simplified the tax structure, introducing three slabs: 5 percent, 18 percent, and a new 40 percent de-merit rate. This overhaul aims to boost consumption and reduce compliance complexity [1].

The revised GST framework aims to make essentials, healthcare, agriculture inputs, and consumer goods cheaper. Meanwhile, luxury and sin goods face higher taxes. This shift is expected to unlock momentum in discretionary spending, particularly in food services and quick commerce [1].

Key changes include:
- Essential goods and services such as food staples, stationery, and life insurance policies are now tax-free or taxed at 5 percent, lowering household expenses and operational costs for businesses.
- Healthcare affordability has improved, with lifesaving drugs and medical oxygen taxed at 5 percent or nil.
- Travel and hospitality sectors benefit from lower taxes on hotel rooms and air tickets.
- Luxury and sin goods such as high-end automobiles, aerated beverages, and tobacco products are now taxed at 40 percent, shifting the burden towards discretionary spending.

While the reforms are expected to boost the food delivery and quick commerce sectors, analysts caution that the benefits may not be uniform. The inclusion of delivery services under GST may lead to higher delivery fees on most apps.

The new GST rates for goods and services will be implemented starting September 22, 2025, with services changes taking effect immediately, followed by goods changes with the exception of tobacco-related products [1].

References:
[1] https://www.india-briefing.com/news/india-gst-reform-2025-rate-revisions-list-goods-39619.html/