Overview

• Ambit Capital estimates a 1.08x multiplier from GST reductions and a 20–50 bps lift to GDP if businesses pass through lower rates to consumers.
• The plan under discussion would collapse slabs to 5% and 18% with a narrow high-rate band on sin and luxury goods that could reach about 40% to offset losses.
• Revenue shortfalls are a key concern, with Ambit projecting ₹0.7–1.8 trillion annually and Nomura flagging roughly ₹1.5 lakh crore, much of it likely borne by states.
• Distributional effects may differ, as moving most 12% items to 5% could ease costs for lower‑income households while reducing the 28% bracket to 18% would favor high‑ticket purchases such as automobiles and ACs.
• The GST Council meets on September 3–4 with a two‑thirds threshold for approval, as Nomura and ICRA caution that near‑term demand may be muted before implementation and rebound afterward.