The recent reduction in the Goods and Services Tax (GST) is expected to ease the financial burden on households across India. With lower prices on essential goods and services, families will see a noticeable drop in their monthly expenses. While this may tempt many to increase spending during the festive season, financial experts are urging people to channel their savings into investments for long-term benefits.
From September 22, 2025, the new GST rates will come into effect, coinciding with the beginning of the Sharadiya Navratri festival. Prime Minister Narendra Modi had announced the GST reduction during his Independence Day address on August 15.
According to Vivek Jalan, Partner at TaxConnect Advisory Services, a family with a monthly budget of around ₹80,000 could save nearly ₹1,639 every month once the reduced tax rates are implemented. Items that earlier attracted 12% GST will now fall under the 5% slab, making essentials cheaper.
For example:
A family spending ₹20,000 on groceries may now spend only ₹18,750.
Health and life insurance premiums of ₹3,348 could drop to ₹2,837.
Even utility bills and clothing costs are set to decline.
For higher-spending households, the savings will be even greater. A family with a monthly budget of ₹3 lakh could save about ₹4,000, while those with a budget of ₹10 lakh may save up to ₹11,400 every month.
While lower costs may free up disposable income, experts caution against splurging on unnecessary purchases. Instead, they recommend putting the additional savings to work through systematic investment plans (SIPs), mutual funds, or gold ETFs.
Pankaj Mathpal, Founder of Optima Money Managers, explained it simply: “If an item that earlier cost ₹100 now costs ₹90, you are left with ₹10 in your hand. You can either use that to buy another item or invest it. If you invest, the benefit will compound over time.”
This advice is particularly relevant during festivals, when families tend to overspend. Financial planners suggest using the savings strategically to build wealth instead of adding to short-term consumption.
The festive period in India traditionally sees a spike in household expenses as families spend on groceries, clothes, gifts, and electronics. With brands and companies offering new discounts and promotional deals alongside the GST cuts, consumers may feel encouraged to increase discretionary spending.
However, experts stress that redirecting even small amounts into investments can make a big difference over the long term. For instance, an additional monthly SIP of just ₹1,000 in equity mutual funds could grow significantly over a decade, helping build a corpus for education, retirement, or emergencies.
Prioritize Investments Over Extra Spending: Instead of giving in to festive marketing offers, put surplus money into financial products.
Consider Diversified Options: Increase allocations to mutual funds, equity SIPs, international funds, or gold ETFs depending on your risk profile.
Follow Asset Allocation Strategy: Distribute savings across equities, debt, and gold to balance returns and risks.
Think Long-Term: Even modest monthly investments can create wealth if continued consistently over years.
The GST reduction is a welcome move that will lighten the financial load for Indian households. But the true value lies in how families use the additional savings. Rather than letting the extra money slip away through impulse spending during the festive rush, disciplined investing can secure long-term financial stability.
As experts emphasize, this is not just an opportunity to save—it’s an opportunity to grow.
