Next Gen GST Reforms: IT Industry Hail Reform Amid Channel Caution on Margins

Following the government’s announcement of a festive bonanza for MSMEs and a wave of supportive state-level actions, India’s next-generation GST reforms are now in effect. This shift to a simplified two-tier tax structure promises to reshape the business landscape. While industry leaders hail its long-term potential, voices from the distribution channel urge caution, highlighting the critical challenge of ensuring benefits reach the end-consumer.

Decoding the New GST Structure for Industry

The reforms consolidate the previous complex slabs into a clearer system. Most goods now fall under a 5% or 18% rate, while luxury and ‘sin’ goods are grouped under a new 40% demerit rate. For the technology sector, this means significant changes: critical components like silicon wafers attract a lower 5% rate, while products like printers and copiers see a welcome reduction, moving from 28% to the standard 18% slab.

Next Gen GST Reforms - Industry leaders applaud the move

The consensus from the top echelons of the tech industry is overwhelmingly positive, hailing the reform as a decisive step forward.

Rajeev Singh, MD, BenQ India and South Asia, emphasised the strategic benefits: "The recent GST reform is a decisive move toward simplifying and streamlining the tax structure... it reduces compliance complexities and fosters a more transparent business environment. Notably, the reduction of GST rates on products such as monitors and projectors further eases costs for businesses and educational institutions."

Echoing this sentiment, Ravi Agarwal, Co-Founder and Managing Director, Cellecor, highlighted the impact on consumer affordability: "The rationalisation of GST rates to a uniform 18% on products such as TVs, monitors, air conditioners, and dishwashers is a particularly positive move. It not only enhances affordability for Indian households but also simplifies compliance and operational efficiency for manufacturers."

Aditya Khemka, Managing Director, CP PLUS focused on the security and surveillance sector: “The recent GST revisions are a progressive step... Rationalising taxes on consumer electronics, critical components like silicon wafers, and logistics will help reduce the cost of hardware... making advanced security solutions more accessible.”

The reform is also seen as a timely enabler for the festive season. Pankaj Rana, Chief Executive Officer, Hisense India, stated: “The government’s recent GST reforms on televisions and air conditioners come at a critical juncture... this move makes our advanced range of our TVs and home appliances even more accessible ahead of the festive season.”

From a broader operational perspective, Ravi Kunwar, VP and CEO, HMD India & APAC, noted: "The Council’s move to consolidate rates and streamline registration and refund processes [drives] substantial change... we expect improved operational efficiency, greater cost predictability, and sustainable growth."

Anurag Sharma, Managing Director & CEO, AKAI India, also stated, “Reducing the GST rate from 28% to 18% is a progressive reform, as it will make televisions, air conditioners, and other electronic appliances affordable for Indian households. The 18% GST slab enables consumers to save around Rs. 3,000 to Rs. 5,000 on major appliances. This bold step will inevitably boost customer demand in Tier II and Tier III cities. The new GST rate cut will empower the entire electronics industry. In addition, the industry will benefit from faster transit times across state borders, improved overall operational efficiency, and lower logistics costs.”

The Distribution Channel Sounds a Note of Caution

Despite the widespread optimism, experienced voices within the distribution network highlight a potential practical hurdle: margin absorption.

Kshitij M Kotak, Executive Director, Blackbox Data Safe, pointedly questioned whether the benefits would truly reach consumers, stating: “The only concern is that manufacturers and suppliers should not raise their profit margins... That fear is inevitable. We are in India. The only thing that becomes cheap is IT infrastructure, technology products and services.”

Pankaj S Shah, Tecnoplus Systems, FAIITA member, “There is a decrease in GST rates of most products consumed daily by every person. Initially, there might be some price fluctuation to consider higher input costs due to higher GST levied earlier, but in the near future, prices will stabilise and decrease as competition takes over.

Aspirational items such as LED TVs, ACs, Dishwashers, etc, by every family, will see an increase in Sales due to a decrease in MRP due to almost a 10% decrease in Taxes, again over a period, and also considering the same angles as above.

One should also check that with increased usage, the Tax collection will catch up sooner than the losses calculated by comparing earlier FY data.”

Echoing this concern from a reseller’s perspective, Anupam Sharma provided a granular view: “I would also like to put forward my perspective on this matter... the same may not hold true for resellers, particularly T3 partners engaged in direct retail. They are unlikely to receive a direct advantage; in fact, compared to the current scenario, they may end up procuring material at a higher cost, since RD and SRD are likely to make adjustments in the basic pricing.”

This highlights the critical difference between a reduced tax rate and a reduced consumer price, with the channel fearing that larger players may adjust base prices to absorb the tax gains as profit.

A Focus on MSMEs and The Path Ahead

Aligning with the government’s vision, these reforms are particularly targeted at empowering MSMEs through faster refunds and simplified compliance. The channel acknowledges that while there may be short-term cash flow adjustments, the playing field is level.

The ultimate success of GST 2.0 will therefore be measured not just by simplified filings, but by how effectively the entire supply chain, from manufacturer to small retailer, transmits its benefits to boost growth and affordability across India.

Read More:

Delhi CM Rekha Gupta echoes GST reform spirit with Diwali gift for traders

Microsoft Azure partner program in India: a 2025 overview

OpenText Partner Led Cybersecurity Strategy for Indian SMBs