- SBI states GST reforms will cause a minimal revenue loss of Rs 3,700 crore
- Government estimates net fiscal impact of GST rationalisation at Rs 48,000 crore annually
- GST Council replaced four-tier GST rates with a two-tier structure of 18% and 5%
The State Bank of India (SBI), in its latest research report, said that reforms in GST through a reduction in rates will cause a minimal revenue loss of Rs 3,700 crore. The government estimates the net fiscal impact of GST rates rationalisation will be Rs 48,000 crore on an annualised basis.
According to the report, given the growth and consumption boost, the minimal revenue loss is estimated at Rs 3,700 crore and will have no impact on the fiscal deficit.
At the 56th meeting of the GST Council held a few days ago, the current four-tier structure was replaced with a two-tier one, with a standard rate of 18 per cent and five per cent, and a demerit rate of 40 per cent on a select few goods and services.
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The report said that the GST rate rationalisation will largely have a positive impact on the banking sector due to meaningful cost efficiencies.
GST rate rationalisation has also brought down the effective weighted average rate from 14.4 per cent at the time of inception in 2017, which is expected to come down to 9.5 per cent, the report said.
When GST was introduced, the four rates were five per cent, 12 per cent, 18 per cent and 28 per cent.
Since the GST rate rationalisation of essential items (around 295) has declined from 12 per cent to five per cent or zero, the CPI inflation in the category may also come down by 25 basis points to 30 basis points in the current financial year, the report said.
Overall, the CPI inflation may be moderated in the range of 65 basis points to 75 basis points over 2026-27, according to the report.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
