SBI Research Report on GST: GST 2.0 was announced amidst the ongoing trade tariff tension with the US. It is being said that due to extensive changes in GST rates, tax rates on essential household goods and services will be reduced. In addition, it can help reduce retail inflation from 0.65% to 0.75% in the next financial year. On Thursday, SBI Research said that in the 56th meeting of the GST Council on Wednesday, two tax slabs of 5% and 18% have been approved instead of the current four -level tax rate structure.
What is going to happen?
In addition, a special rate of 40% has been fixed for some luxury and harmful goods and services. The new tax rates will be effective from 22 September except tobacco and related products. The SBI report further stated that out of the 453 items which were changed in GST rates, 413 items were seen to be seen to be seen, while only 40 items were seen to be increased. About 295 items now apply 5 percent or 0 GST rate instead of 12 percent.
Since the GST rate of essential commodities (about 295 items) has come down from 12% to 5% or 0, the consumer price index-based inflation in this category can also be reduced by 0.25 to 0.30 percent in FY 2025-26, keeping in mind the effect of getting 60% of customers on food items.
Why can inflation be reduced?
If you believe in SBI Research Report, then rationalization of GST rates on services will reduce retail inflation on other goods and services from 0.40 to 0.45%. In this, customers have been estimated to get 50% benefits.
According to the report, retail inflation may decrease from 0.65 to 0.75% during the financial year 2026-27. The effective weight average GST rate has come down to 11.6 percent in September 2019, which was 14.4 percent in the beginning, with the GST Council rationalized by the GST Council. According to the report, in view of the current change in rates, the effective weight average GST rate can be reduced to 9.5 percent.
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