Overview

• The Finance Ministry’s draft collapses GST to 5% and 18% with a 40% special slab for a short list of sin or luxury goods, shifting nearly all 12% items to 5% and about 90% of 28% items to 18%.
• A Group of Ministers on rate rationalisation meets Aug. 20–21, with Finance Minister Nirmala Sitharaman slated to brief the panel, before the GST Council takes up the plan in September or October for a Diwali rollout.
• Private estimates put the annual revenue impact near Rs 1.1 trillion (about 0.3–0.4% of GDP), which reports say can be cushioned by surplus cess funds, higher RBI/PSU dividends, and disinvestment receipts.
• Economists and brokerages expect the rejig to cut headline inflation by roughly 50–60 basis points over a year and lift nominal growth by 0.4–0.6% via stronger consumption.
• Autos, FMCG, consumer durables, cement, tractors and insurance are flagged as likely beneficiaries, though states must consent to the changes and the compensation cess is set to lapse in November as the 40% slab replaces it for demerit goods.