New Delhi: Finance Minister Nirmala Sitharaman is expected to present the Centre’s plan to simplify GST rates before a Group of Ministers (GoM) at a two-day meeting starting August 20 in Delhi.
The GoM, led by Bihar Deputy Chief Minister Samrat Choudhary, will meet in person at Vigyan Bhawan on August 20–21, beginning at 12 noon. A six-member state panel will discuss the Union government’s proposal to shift to a two-slab GST system.
A final decision is likely to be taken at the GST Council meeting on September 18–19.
The move comes after Morgan Stanley, a global investment firm, said in a report that tax reforms, including GST changes, could strengthen India’s consumption story. It noted that lower indirect taxes, along with income-tax cuts, job growth, and rising wages, would boost household demand.
According to the report, the GST revamp may temporarily slow sales as consumers wait for clarity, but demand should recover once the new system is rolled out. Lower indirect taxes especially help low-income households, as such taxes usually hit them harder.
Morgan Stanley estimated that the GST revamp could act as a stimulus of 0.5–0.6 percent of GDP each year, potentially lifting growth by 50–70 basis points and reducing inflation by about 40 basis points. However, it also warned that both the Centre and states may see short-term revenue losses.
The government’s proposal, in line with Prime Minister Narendra Modi’s Independence Day announcement of “next-gen GST reforms before Diwali,” is built on three priorities: structural reforms, rationalised rates, and ease of living.
The new system is expected to have just two main GST rates — 5 percent for essentials and 18 percent as the standard rate.
