FM Sitharaman To Present GST Rate Rationalisation Proposal Before GoM On Aug 20

Finance Minister Nirmala Sitharaman will place the Centre's proposal on GST rate rationalisation before the Group of Ministers in a two-day meeting starting August 20.

The GoM, led by Bihar Deputy Chief Minister Samrat Choudhary, is scheduled to convene in person at Delhi's Vigyan Bhawan on Aug. 20 and 21. Proceedings will begin at 12 noon, sources said.

A six-member state panel will discuss the Union government's proposal to shift to a two-slab goods-and-services-tax structure. The GST Council is likely to meet on Sept. 18-19 to take up the proposed comprehensive rate restructuring, they said on Sunday.

Brokerages Jefferies and Morgan Stanley believe that a rationalisation of tax slabs could drive a virtuous cycle of growth. While a potential tax cut on consumer durables and other goods could provide a much-needed push to consumption, the timing and extent of these cuts remain uncertain.

Morgan Stanley highlights that retail health and life insurance segments stand to gain the most, with SBI Life, HDFC Life, and ICICI Lombard among the key beneficiaries. "Improving affordability could increase the appeal of insurance to lower-income customers," it said, adding that up-selling and cross-selling opportunities to existing customers may be easier wins.

Jefferies anticipates a simplified rate slab structure, with a good chance that GST on cement, two-wheelers, and air conditioners could be lowered to 18% from the current 28%. Other potential rate reductions are expected for processed foods, footwear, and garments, though passenger cars are likely to be excluded.