GST rationalisation lifts affordability, boosts retail credit demand: CIBIL

GST rationalisation in September has improved affordability of goods and helped boost the retail credit market, a TransUnion CIBIL report said on Monday. It said increased retail loan demand signalled renewed consumer confidence and market optimism.

This improvement was particularly evident in segments such as vehicle finance (two-wheeler loans and auto loans) and consumer durables, which showed robust incremental year-over-year (YoY) growth during the pre-festive period (post-GST 2.0 implementation).

Effective September 22, GST rates on about 375 items were slashed, making mass-consumption items, electronic items and cars cheaper. “The Goods and Services Tax (GST) rationalisation in September 2025, just before India’s festive season, seems to have helped boost the retail credit market.

With improved affordability, retail borrowers sought more credit,” the report said. “GST 2.0 was a much-needed step to stimulate economic growth, and its positive impact is evident in the improvement of consumer sentiment and the upward trend in credit demand... Lenders must engage with consumers at multiple touchpoints to ensure financial discipline and sustainability to support healthy growth of credit in India,” TransUnion CIBIL MD and CEO Bhavesh Jain said.