Overview

• The Group of Ministers on rate rationalisation meets August 20–21, with the finance minister set to brief members on the Centre’s proposal, and any consensus would move to the GST Council likely next month.
• The draft shifts GST to two main rates of 5% and 18% with a special 40% levy confined to 5–7 demerit goods such as pan masala, tobacco and online gaming.
• Under the plan, about 99% of items now at 12% would drop to 5%, and roughly 90% of the current 28% basket would move to 18%.
• S&P Global Ratings says simpler slabs could marginally lower the effective rate yet improve compliance and support longer-run revenues, with a possible near-term lift to consumption.
• Analyses caution revenue pressures, with Hindustan Times warning losses unless the high slab is used broadly and SBI Research estimating an average annual shortfall of about Rs 85,000 crore even as consumption could rise by roughly Rs 1.98 lakh crore.