By CA Pankaj Kapoor, Assistant Professor, School of Commerce, NMIMS Chandigarh
The article analyzes the 56th GST Council Meeting (September 2025), which rationalized India’s GST framework from four slabs (5%, 12%, 18%, 28%) to a streamlined two-slab system (5% and 18%), alongside a 40% tax on luxury/sin goods.
Key highlights:
- Relief for households: Everyday essentials like soaps, food items, and bicycles moved to 5% or exempt categories, boosting disposable incomes.
- Sectoral impact: FMCG, healthcare, agriculture, handicrafts, and renewable energy sectors stand to gain from reduced tax burdens.
- Growth outlook: Lower consumer costs may push GDP growth up by ~0.6%.
- Public health gains: A 40% GST on cigarettes, pan masala, sugary drinks, and luxury vehicles could reduce unhealthy consumption.
- Fiscal challenges: Estimated annual revenue shortfall of ₹48,000 crore (~0.4% of GDP) could strain Centre–State relations, with states demanding compensation.
- GST 2.0 efficiency: Simplification, automation in refunds, and streamlined registrations will lower compliance costs and support MSMEs.
Overall, the reforms mark a bold stride towards a simpler, consumer-friendly, and growth-oriented tax system, aligning with the vision of Viksit Bharat 2047, while underlining the need for prudent fiscal balancing.
