Will GST Rates Come Down? Understanding the Anticipation
GST (goods and service tax) is levied on indirect goods and services. There are 33 members in a GST council – 2 at the centre,28 from different states and 3 from union territories. The tax structure is categorised into 5 types of tax slabs – 0% 5%, 12%, 18%, 28% that came into effect on July 1, 2017.
India currently recognises four types of GST returns :
- CGST – ( Central Goods and Services Tax) – It is collected by the central govt. in the trade of intra-state.
- SGST- ( State Goods and Service Tax ) – It is levied by the state govt. When buying or selling something within your state.
- IGST – ( Integrated Goods and Service Tax ) – The collection of IGST is distributed between both central and state govt.
- UTGST – ( Union Territory Goods and Service Tax) – This revenue is collected between union territories and directly goes to the union territory’s administration.
The GST council changes their rules and regulations multiple times. One of the most importants are that traders whose turnover is more than 5 crore annually have to issue e-invoices, and it was implemented from August 1, 2023.
Overview of rate cut anticipation :
Rate cut anticipation usually refers to a reduction of goods and service tax on multiple items that is announced by PM Narendra Modi on 15th August 2025.
The head of Goods and Service Tax Council, Finance Minister Nirmala Sitharaman, stated that from mid-September, the new GST rate slab will start. The implementation is expected to coincide in the time of Navaratri.
The rate cut is classified into two categories: merit (5%) and standard(18%). A special 40% would apply on special items or demerit goods like premium cars, tobacco, cigarettes etc.
He said it ‘double Diwali’ for all the countrymen and named it GST ‘2.0’.
There can be a reduction of approximately 10% which will make the 28% slabs into 18%. Some exceptions are – on household or FMGC goods7%, salon and beauty service 13%, health and life insurence 18% or 13%.
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Effect on various sectors :
- Automobile: Currently automobile industry falls under the highest tax slab of 28%. It is one of the biggest benefits whenever the GST council reduces their tax.
As PM Narendra Modi has announced about the deduction of the price mainly on smaller cars and two-wheeler, buyers have started to count the time.
Example: If a person buy a car of 5 lakh, as a discount of 10 to 12% he will get a discount of 50k to 60k.
Disadvantage of automobile: As a result of this, the automobile industry is fearing to suffer during the upcoming festive period as customers delay buying a new one.
2. FMGC or Processed Food: Currently, many FMGC products are fall under 18 to 12% GST rate. There will be a good reduction in packaged food like biscuits, noodles, dairy products, etc and FMGCs like soap, detergents, oil, etc. These companies will get a handsome profit from the reduction. Smaller FMGCs and chain suppliers will be very helpful through it.
3. Cement: Almost 7 to 8% reduction will be applied in this sector.
4. Hotels: In Indian rooms below 7500Rs will get a good reduction through this system.
5. Footwear: Footwear companies could profit a mass as the footwear below 1000Rs will get almost 5% reduction.
Impact on the festive Season:
In India, a lot of people plan to do maximised consumption in the time of festivals according to their religion. Mid-September is a time of a lot of festivals like Durga Puja, Navaratri, Eid and many more. E-commerce sectors and retailers schedule their sales in September. So there is a huge profit for them at that time.
Benefit of GST rate cut :
- Lower price: consumers will buy products at a reduced price.
- Boost in demand: When the price becomes low, customers will buy more product than before.
- Growth in economy: It will be a great opportunity to bring a wave in the economic growth in India.
- Industry Growth: When the sales increase, the production of the related industries has to grow. And it will be very beneficial for them to make a profit.
Rural and urban consumers’ consumption :
Agriculture-based items like fertiliser, seeds, and tools will get a good reduction in the rural areas. Small businesses and suppliers will also profit through this system.
In urban areas, online sectors, branded products, and packaged items will get a good reduction.
In conclusion, Industry experts believed that this rate cut would bring a new wave to the economy of India. Though the white goods industry may face a little trouble, overall, it can be expected that this change will be beneficial for most of the sectors.
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