Overview

• The Centre’s proposal before the 56th GST Council would drop the 12% and 28% slabs, shift many goods to 5% or nil, retain 18% as the standard rate, and introduce a roughly 40% band for sin and luxury items.
• Daily-use items and education supplies are flagged for reductions or exemptions, with separate proposals to zero-rate individual health and term insurance and to simplify compliance through pre-filled returns and faster refunds.
• Sectoral impact analyses point to gains for FMCG, footwear, packaged foods and some consumer durables, while autos could see smaller cars, hybrids and sub‑350cc two-wheelers move to 18%, with high-end vehicles and tobacco facing higher levies around 40%.
• Several opposition-led states warn of annual revenue losses of about Rs 85,000 crore to Rs 2 lakh crore and demand multi-year compensation, while SBI projects states remain net gainers after devolution and suggests using a compensation-fund surplus to cushion any hit.
• An officers’ meeting on Sept. 2 set the agenda for the New Delhi session chaired by FM Nirmala Sitharaman, with a rapid rollout targeted if consensus emerges, and markets and auto buyers already reacting to anticipated cuts.