Indian shares set for strong start on government’s tax bonanza ahead of festivals

Indian shares are set to open higher on Thursday after the government slashed levies on several goods to fire up consumption, a festive-season boost that also seeks to counter the pressure from steep US tariffs.

Gift Nifty futures were trading at 24,978.5 points as of 07:44 a.m. IST, indicating that the Nifty 50 will open about 1% above Wednesday’s close of 24,715.05.

On Wednesday, the Goods and Services Tax (GST) council approved a shift to a two-rate structure from the existing four slabs, and said everyday items will face lower taxes starting September 22.

The GST cuts should boost economic growth and festive season demand, acting as the key policy support needed to soften tariff impact, according to analysts led by Mahesh Nandurkar of Jefferies.

“GST rate changes, along with (the) RBI’s rate cuts, income tax rebates announced in FY26 budget and easing inflation are all levers for a consumption uptick in the economy,” said Garima Kapoor, economist and executive vice president at Elara Capital.

Economists expect the GST reforms to lift GDP growth by 100-120 basis points over the next four to six quarters.

Analysts said consumer goods and automobile makers are set to gain, as taxes on essentials such as toothpaste and shampoo have been reduced to 5% from 18%, while levies on small cars, air conditioners and televisions were cut to 18% from 28%.

Fast-moving consumer goods firms such as Hindustan Unilever, Nestle India, air conditioner makers like Blue Star and Voltas, and automakers such as Maruti Suzuki India are likely to benefit the most.

Meanwhile, GST will be removed from all individual life insurance policies and health insurance, Finance Minister Nirmala Sitharaman said.

The GST panel also approved a 40% tax on “super luxury” and “sin” goods such as cigarettes, cars with engine capacity exceeding 1,500 cubic centimeters and carbonated beverages.