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On 3 September 2025, the GST Council announced transformational changes to India’s tax structure. The reforms replace the previous four-slab system with a streamlined model: 5 per cent for merit and essential items, 18 per cent as the standard rate, and a new 40 per cent rate applicable to luxury and de-merit goods. These revisions take effect from 22 September 2025.
The overhaul brings a substantial reduction in tax rates across food items and everyday necessities, offering relief to consumers and industries alike. At the same time, delivery platforms face new tax obligations, introducing cost pressures in the fast-moving food delivery and q-commerce sectors.
1. Lower GST On Food And FMCG Items
Under the new structure, many food products now attract a 5 per cent GST rate, previously taxed at 12 per cent or 18 per cent. Items such as chocolates, cooking oils, milk powder, sugar, noodles, and basic medical supplies now become cheaper, easing household budgets ahead of festivals.
Essential food staples such as chapatis, parathas, UHT milk, paneer, pizza bread and khakra now enjoy nil GST rates. A broad array of packaged goods, namkeen, sauces, pasta, instant noodles, biscuits, dry fruits, and confectionery, move to a reduced rate of 5 per cent.
These concessions are expected to lower prices and support consumption, particularly in the festive period when demand tends to surge.
2. GST On Delivery And Quick Commerce
A significant change impacts food delivery platforms and q-commerce services. For the first time, delivery fees are now subject to 18 per cent GST. Platforms such as Zomato, Swiggy, Blinkit, Zepto, and Instamart must collect and remit this tax, which was previously exempt.
This move shifts tax liability onto the platforms, triggering an estimated annual burden of ₹180–200 crore each for major operators like Zomato and Swiggy. Platforms may either raise delivery or platform fees or absorb the cost, both choices potentially affecting pricing strategies and profitability.
3. Boost To Festival-Related Spending
The GST rationalisation is expected to invigorate festive spending in sectors like food delivery, quick-service restaurants, and q-commerce. With lower tax on essentials, consumers may feel confident increasing discretionary purchases. Analysts anticipate a revival in demand, particularly in non-metro areas where q-commerce is gaining traction.
Online festive shopping is projected to surge by 115 per cent, with categories such as gourmet foods and groceries leading the trend.
4. Broader Compliance And Process Reforms
Beyond rate adjustments, the GST Council approved structural reforms to strengthen ease of compliance. Measures include auto-refunds, prefilled tax returns, and a simplified registration process for small suppliers on e-commerce platforms. These are expected to roll out by October 2025.
The reforms will help small businesses, including food producers and q-commerce vendors, to manage tax processes more efficiently during peak demand periods.
5. Winners And Losers
Consumer goods firms, particularly those in packaged food and FMCG, stand to benefit from increased affordability and demand. Iconic brands such as Hindustan Unilever, Nestlé, and Godrej may gain an uptick in volumes.
Conversely, q-commerce and delivery platforms may face margin pressure. Analysts foresee a mixed impact, while demand may rise, the additional GST on deliveries challenges profitability.
6. Implications For Consumers And Industry
Consumers are likely to enjoy reduced prices on a wide array of essential food items. The lower tax burden, combined with festive discounts, could make festive shopping more rewarding.
For the food industry, the policy creates opportunities to expand reach. Yet, platforms must navigate newfound cost structures and revise their pricing models judiciously.
In the q-commerce space, sustained growth hinges on balancing affordability with operational viability. Firms that innovate on cost efficiencies will gain a competitive edge.
India’s GST overhaul fundamentally recalibrates taxation in favour of everyday essentials, marking a consumer-friendly shift ahead of the festive season. Food products become more affordable, compliance becomes simpler, and consumption is likely to rise. However, imposed GST on delivery services introduces fresh challenges for quick-commerce and food-delivery players.
As businesses adapt, the consumer may be the ultimate beneficiary, if firms choose to pass savings forward rather than shield profits. The success of this GST revamp will be measured in how well the reforms translate into lower bills, smoother deliveries, and resilient market growth.
