The Centre is preparing to roll out Goods and Services Tax (GST) cuts at the earliest, sources told CNBC-TV18. It may also press the GST Council to approve rate cuts with immediate effect, though no final decision has been taken yet. The Council will take a call.
According to sources, the government is concerned about the likelihood of stalled sales across sectors. It is working on measures to address states’ concerns over the potential revenue impact of rate cuts.
Harmonised System of Nomenclature (HSN) codes are unlikely to need changes, but tax rates will require revisions if cuts are approved, sources said.
These discussions come on the back of recent reform proposals.
Last week, the Group of Ministers (GoM) on GST rationalisation accepted the Centre’s proposal to move to a simplified two-slab GST structure of 5% and 18%. Bihar Deputy Chief Minister Samrat Choudhary stated that the GoM has recommended scrapping the 12% and 28% slabs.
The recommendation followed the Central Government’s August 15 proposal for a comprehensive GST reform plan built on three pillars—structural reforms, rate rationalisation, and ease of living.
In his 79th Independence Day address, Prime Minister Narendra Modi had stressed the need for GST changes that would benefit the common man, farmers, middle class, and MSMEs, calling GST since its rollout in 2017 a major reform for the nation.
An tax expert said, “The sooner the GST rate rationalisation takes effect, the better it will be. Postponement of buying decisions, especially during the peak festive season, benefits no one—not the revenue, not consumer-facing organisations, nor consumers. A timely rate cut will boost consumption and generate a multiplier effect across states, offsetting revenue concerns.”
He added, “While implementing a rate cut may pose challenges for businesses due to GST being a destination-based consumption tax, there is precedent from the pre-GST era where excise duty cuts announced on one day took effect immediately the next day. A small window of a week or so may be given for adjustments, but the faster it is implemented, the better it benefits all stakeholders.”
