Mumbai, September 3: The GST Council, chaired by Finance Minister Nirmala Sitharaman, has begun a crucial two-day meeting in New Delhi (September 3–4), with sweeping tax reforms on the agenda. The move is seen as Prime Minister Narendra Modi’s promised “Diwali gift” to consumers and industries.
Key Proposals Under Review
Simplified Tax Structure: A major restructuring of the four-tier Goods and Services Tax (GST) system into a two-slab model—5% and 18%—with several intermediate rates likely to be eliminated.
Relief for Auto Sector: Small cars (sub-4-metre petrol vehicles up to 1200cc), which currently attract 28% GST plus cess, could see their effective tax brought down to 18% plus cess. This may translate into consumer savings of ₹50,000–₹80,000 per car.
Broader GST Reductions: Essential and popular goods such as shampoos, toothbrushes, televisions, and hybrid cars may see their tax rates slashed—some items shifting from 18% to 5%, and others from 28% to 18%.
Market & Consumer Reactions
Consumers: Many buyers are postponing purchases of cars, bikes, and electronics, waiting for official rate cuts.
Dealers: Auto dealers are treading cautiously, delaying inventory buildup until the Council’s decision is finalized.
Manufacturers & Stocks: Analysts believe lower GST will rejuvenate demand. Brokerage firm Jefferies has already revised its projections upward, favoring auto stocks like Maruti Suzuki and TVS Motor.
Expected Impact
Financial experts estimate the rationalization could reduce on-road prices of vehicles by 6–8%, potentially triggering a festive-season sales boom.
The Balancing Act
While the reforms could simplify India’s indirect tax structure and give a strong push to consumption, the government must weigh the benefits against potential revenue losses for states. Swift implementation will be key to ensuring both industry and consumer confidence.
