Overview

• New proposals back a simplified structure centered on 5% and 18%, scrapping the 12% slab and sharply trimming the 28% band, with a limited higher rate for select sin goods under consideration.
• Fitment suggestions include shifting textiles and key fertilisers to 5%, widening the nil rate for essentials and school supplies, and cutting GST on small cars to 18% from 28%, subject to Council approval.
• The CBIC cautioned against premature rate speculation and confirmed decisions will be taken collectively at the 56th GST Council meeting next week.
• Analysts flag sizable revenue risks for states, with estimates up to about ₹1.66 lakh crore annually, raising questions over compensation and the weighted voting needed for passage.
• Industry reaction has been supportive, with Maruti’s R. C. Bhargava welcoming potential car tax cuts, as US duties of up to 50% took effect on Aug. 27 and BMI/Fitch-linked analysis said GST reforms could soften the tariff hit.