Overview

• Finance Ministry proposals collapse GST to 5% and 18%, shift nearly all 12% items to 5% and most 28% items to 18%, and create a ~40% slab for a short list of sin and luxury goods.
• Officials signal the compensation cess will lapse in November, with a narrower high‑rate category replacing broad cess usage on select products such as tobacco and high‑end automobiles.
• The fitment committee’s draft goes to a GoM led by Bihar Deputy CM Samrat Choudhary on Aug 20–21, followed by GST Council consideration in September–October and a Diwali‑period rollout if states agree; Finance Minister Nirmala Sitharaman is slated to brief the GoM.
• Analysts estimate an annual revenue impact of roughly Rs 1.0–1.4 lakh crore (about 0.3–0.4% of GDP), which they and officials describe as manageable via offsets including higher RBI/PSU dividends, residual cess funds, and disinvestment.
• Brokerages project a demand boost and a 50–60 bps easing in CPI, with expected gains for small cars and sub‑250cc two‑wheelers, FMCG and processed foods, consumer durables like ACs and TVs, cement, tractors, and insurance.