Money Wise: GST Bonanza Will Put More Money In Your Hands

The Indian government has undertaken a massive reform of indirect taxes, which will take effect from September 22. Last week, in a single day, the GST Council ratified proposals made by the government last month to transform the goods and services tax. In about two weeks, a simplified tax regime will be rolled out, with lower rates on a number of daily use products and services.

The crux of the matter for the average Indian is the two-rate regime – 5% and 18%. The other two rates – 12% and 18% – will disappear and most items that they contained will move to a lower slab or, in some cases, be exempt from tax entirely. In some cases, like small cars and many two wheelers and several consumer durables like air conditioners and large televisions, the effect on the prices will be apparent. Manufacturers have, after all, largely said they will pass on the lower taxes to customers.

But in a lot of cases, you're unlikely to notice the difference on a per item basis. Instead, you're likely to have more money in your hands without realising it. What are the implications? For the government, this would have an immediate impact – there would be a short-term loss of revenue, which the government has pegged at Rs 48,000 crore. But, there is also expected to be a boost in consumption – that's the natural expectation when things get cheaper. And if that takes place, the government will make up some of this revenue loss.

For you, and your finances, the impact may not be immediately apparent. Instead, you may find that you have more money at the end of the month. But, in my opinion, this shouldn't change your approach to your finances. Most financial advisors agree that it is better to frontload savings. The best practice calls for an investment of 25-30% of whatever you receive as income as soon as you receive it. Early on in your career, you could also start with a smaller percentage to get used to the idea of saving. The advantage of this is that you learn to operate with less. What helped me personally is setting up another account – and transferring 30% of whatever I receive. Investments into mutual funds through SIPs and lumpsums can then be directed from this second account.

The beauty of this method, as simple as it may seem, is that you're free to spend without guilt.

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Health and Life Insurance To Get Cheaper

A major update for individuals is that the premium on term insurance and health insurance will attract no GST. It is currently taxed at 18%. But here's the thing – you shouldn't go out and buy insurance just because it is cheaper. Indeed, this protection is a must for most people irrespective of the cost. After all, health insurance will continue to get more expensive – even if it is only adjusted to medical inflation, which is currently at 7-9%.

Though a cheaper policy is a nice benefit to have, of course.

For term insurance, the same rules apply. If you have a financial dependent, you must have protection. This will ensure that their needs are taken care of if you're no longer around to provide for them. And the earlier you get it, the better it is, because it will only get more expensive as you grow older. After all, the premium you pay is a reflection of the risk that the insurance company takes on.

Here are a few stories you can read on the website:

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GST Rate Cuts: Planning To Buy Your Dream Car Now? Check Which Models Got Cheaper And Costlier

GST Cut Price Puzzle: Will Flipkart Big Billion Days, Amazon Great Indian Festival Attract Better Deals?

Home Loan Rates September 2025: SBI To HDFC, Interest Rates Of Top Banks Compared

Happy reading!

Alex