GST Reforms to Boost Affordability and Consumption Across Sectors: Report
According to the report, the food and beverages sector will benefit from a GST reduction to 5 per cent on packaged foods, dairy, and snacks, driving volume growth
New Delhi: The proposed Goods and Services Tax (GST) reforms are set to significantly impact various sectors by reducing tax rates, enhancing affordability, and boosting consumption, said a report by Systematix Research.
According to the report, the food and beverages sector will benefit from a GST reduction to 5 per cent on packaged foods, dairy, and snacks, driving volume growth. Consumer durables and automobiles are also expected to see increased demand due to lower GST rates on white goods and small vehicles.
Construction materials, healthcare, textiles, and renewable energy sectors will gain from tax cuts, improving margins and competitiveness. MSMEs (Micro, Small, and Medium Enterprises) and hotels will benefit from structural corrections and better credit utilisation, the report added.
However, luxury goods, tobacco, and online gaming will face a high 40 per cent tax slab, while petroleum and luxury vehicles remain unaffected. “Overall, the reforms promote affordability and formalisation,” the report stated.
According to government sources, the Central Government proposes to eliminate the current 12 per cent and 28 per cent GST rates, retaining only the 5 per cent and 18 per cent rates. They said 99 per cent of the items in the 12 per cent slab are proposed to move to 5 per cent, while 90 per cent of items in the 28 per cent slab are set to move to 18 per cent.
Consumer goods currently in the 28 per cent slab are also proposed to shift to 18 per cent. A new 40 per cent slab will be introduced for “sin goods” like tobacco and pan masala.
The initiative aligns with Prime Minister Narendra Modi’s Independence Day announcement that people will receive a “big gift” this Diwali, with the government embarking on a major GST reform.
