The overhaul of the GST rates is seen as the start of kick-starting the next wave of reforms in the country. The government seems to be in a clear overdrive to boost consumption and the overall economy. As the economy is looking at tackling the steep 50% Trump tariff that came into effect on August 27, the latest GST announcements are seen as a catalysts to push the growth engine forward.
Here are top 7 takeaways for Indian investors on how this rate restructure could potentially impact the country –
Consumer is King – Lower GST tax slab
One central theme that the GST rate restructure is expected to bring forth is boosting consumption. From ACs to air purifiers, cars to cable, almost 99% of the current list of items in the 12% slab will move to the 5% slab. Nearly 90% of those goods in the 28% slab are now going to shift to the 18% level. Interestingly, the timing of the implementation is also pertinent. September 22 marks the beginning of the long festive season in India starting with Navratri and ending with Dhanteras and Diwali. This period generally sees a boost in buying and the lower rates are set to provide further impetus.
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The auto sector is considered as one of the biggest beneficiaries of the GST rate cut. The sector has long demanded a uniform GST for various segments . With the current revision in rates, it is expected to encourage buyers to plan their next car buy soon. In this context also the September 22 implementation date is significant. The tax cuts on two-wheelers and small cars is expected to bring significant demand inflexion;. The SUV tax cut is a surprise win and lower tax on CVs and tractors are set to propel around growth buzz. Even for Eicher, the makers of Royal Enfield (with 350 cc bikes commanding a 40% rate in portfolio), it’s a win. Only 8% of the portfolio will see a tax hike, while 80% get a tax cut.
Moreover, with the rates coming down and the difference between EVs (with 5% GST) and hybrids now at 18% (with 28% GST earlier),
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