Overview

• Three GoMs meet Aug 20–21 to craft recommendations on rates, insurance and cess for the GST Council’s Sept–Oct review, with Finance Minister Nirmala Sitharaman expected to brief the rate panel on Aug 20 and a Diwali rollout the stated goal.
• The proposal collapses slabs to 5% and 18%, shifts roughly 99% of items now at 12% to 5% and about 90% of items at 28% to 18%, creates a 40% slab for select sin/luxury goods, and is reported to let the compensation cess lapse in November.
• Independent estimates peg the annual revenue impact at about Rs 1.0–1.4 lakh crore (≈0.3–0.4% of GDP), with officials and UBS citing cess surpluses and higher RBI/PSU dividends as buffers and economists projecting roughly a 50 bps inflation dip and a 0.4–0.6% lift to growth over 12 months.
• Brokerages expect rate cuts to spur consumption across autos, air-conditioners, FMCG, cement and insurance, and auto and consumer stocks rose on expectations of the reform.
• Risks flagged include pressure on state finances and a potential narrowing of the price gap that supports EV adoption if taxes on conventional vehicles fall, with analysts warning volume gains must offset tax losses.