Could GST Slab Revisions Make Goods Cheaper and Stimulate Demand?
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Synopsis
As the GST Council meets, experts believe revisions could lead to reduced prices for goods, enhancing demand and potentially stimulating the economy. With significant tax reforms on the horizon, consumers might soon benefit from lower costs and increased disposable incomes.
Key Takeaways
- Potential tax reforms from the GST Council could lower prices.
- Economists expect consumer demand to rise significantly.
- Changes may streamline the indirect tax system.
- Increased disposable income will enhance spending capacity.
- FMCG prices may fall by at least 15 percent.
New Delhi, Sep 3 (NationPress) Economists stated on Wednesday that the current 56th session of the Goods and Services Tax (GST) Council, led by Finance Minister Nirmala Sitharaman, has the potential to initiate significant tax reforms that would directly benefit consumers.
They believe that any adjustments to the GST slabs could lead to lower prices for goods and significantly enhance demand in the economy.
According to economist Rajeev Sahu in an interview with IANS, this two-day council meeting is vital as it may propose changes to the four-tier GST slab framework established in 2017.
“This represents a substantial reform, alluded to by Prime Minister Narendra Modi during his Independence Day address from the Red Fort,” he stated.
Presently, the GST system consists of four slabs: 5 percent, 12 percent, 18 percent, and 28 percent.
Sahu mentioned that the proposals under consideration include consolidating the 28 percent slab into the 18 percent slab and reducing the 12 percent slab to 5 percent. This adjustment, he emphasized, would significantly lower prices for most products.
Economist Surya Narayanan supported this view, predicting that the prices of goods, especially in the fast-moving consumer goods (FMCG) sector, could decrease by at least 15 percent.
“As goods become more affordable, demand is expected to rise. Increased consumption will subsequently boost GDP growth. This discussion transcends mere tax restructuring or price reductions; it also emphasizes simplifying return filing and compliance processes,” he elaborated.
Manoranjan Sharma, Chief Economist at Infomerics Ratings, noted that the new framework would retain only the 5 percent and 12 percent slabs, directly benefiting the average citizen.
“Households will experience an increase in disposable income, allowing for greater spending capacity than before,” Sharma mentioned.
Economists agree that the proposed alterations in GST will not only streamline the indirect tax system but also provide a robust stimulus to consumption-driven growth in the Indian economy.
Point of View
We recognize the importance of the GST revisions in shaping India's economic landscape. These potential reforms are crucial for providing financial relief to consumers and fostering growth, reflecting our commitment to reporting on developments that matter to our readers and the nation.
NationPress
03/09/2025
Frequently Asked Questions
What are the current GST slabs in India?
The current GST structure includes four slabs: 5 percent, 12 percent, 18 percent, and 28 percent.
How could GST revisions impact consumers?
Revisions to the GST slabs could lower prices of goods, leading to increased demand and disposable income for consumers.
Who is leading the GST Council meeting?
The meeting is chaired by Finance Minister Nirmala Sitharaman.
What changes are proposed in the GST slabs?
Proposals include merging the 28 percent slab with the 18 percent slab and reducing the 12 percent slab to 5 percent.
How might this affect economic growth?
Lower prices could stimulate demand, leading to increased consumption and potentially boosting GDP growth.
