GST Rate Cut Live: Zero GST On Essential Drugs, Health Insurance; Consumption Push

While GST tax cuts may seem like a free lunch for consumers ahead of festivities, Pranjul Bhandari the chief India economist at HSBC, has flagged uncertainties. According to her, the true impact hinges on manufacturers passing on benefits and the government compensating revenue losses.

She said that "there is no free lunch here, somebody benefits and somebody loses. I think we have to be mindful of that at this point of time." This encapsulates her view, that while ''a festive-season tax cut is great, but there are factors to be cautious about''.

With GST cuts, the implicit assumption is that money in the hands of the households has more multiplier effect (on the economy) than government spending, Samiran Chakraborty, chief economist - India at Citibank, told NDTV Profit.

"Out of this tax benefit, how much will be saved and spent. This will based on houselold confidence in saving versus spending," he said.

Coal, which previously attracted 5%, will now be taxed at 18%, raising costs for coal-based industries.

The positive impact of reduction in Goods and Services Tax announced by the government on the Indian economy will be guided by household confidence and which way the consumer leans in the 'save versus spend' pole, experts said.

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