Efforts on to roll out GST rate cut as early as possible, govt officials

Once the GST Council recommends revision in rates, the Centre and States will have to notify changes to implement it
| Photo Credit:

The Centre, with the cooperation of States, will try to implement GST rate cut “as early as possible” after the GST Council meeting, said two government officials on Monday. The council is scheduled to meet on September 3 and 4 in New Delhi.

Once the GST Council recommends revision in rates, the Centre and States will have to notify changes to implement it. Many sectors, especially automobile and consumer electronics, apprehend that customers will postpone their purchases till the lower rates come into effect. This is critical as Navratri, the auspicious period for new purchases, is set to begin on September 22. As stocking begins in at least 2-3 weeks in advance, consumer goods companies and automakers are anxious for an early roll out of the GST rate cut.

“We will need to discuss it as this also involves approval of State legislatures,” one of the officials told businessline. There have been instances of GST rate revision implemented with immediate effect like changes in Central Excise, but that was for a limited number of products. As the present exercise entails rationalisation of the entire GST rate system, a different strategy needs to be adopted.

The second official said that keeping festive buying in mind, the Council has advanced the meeting date to the first week from the third week of September. “Efforts would be to make the rate cut effective as early as possible,” he said. Also, he mentioned that entire exercise will keep in mind the Shradh (Pitru Paksha), which begins on September 7 and ends on September 21. It may be noted that Shradh is not considered auspicious for new purchases.

A Group of Ministers (GoM), under the convenorship of Bihar Deputy Minister Samrat Chaudhary, has already endorsed the Centre’s proposal of two basic GST rates of 5 per cent and 18 per cent. Now, the GST Council will make a decision over this. While the GoM was in favour of rate and slab rejig if it benefits the common man, some members want ultra-luxury items, such as high-end cars, to be face an additional levy on top of the special 40 per cent tax. This would require change in GST law as present provision caps the maximum slab rate at 40 per cent.

four basic rates

Currently, there are four basic rates — 5, 12, 18 and 28 per cent, besides special rates of 0.25 per cent and 3 per cent. Some goods, such as tobacco and automobiles, are under a 28 per cent rate plus a compensation cess. Apart from reducing the basic rates to two, the Centre has also proposed retaining special rates such as 0.25 per cent (uncut diamond) and 3 per cent (gold and silver) and special rate of 40 per cent for 5-7 sin goods.

This whole exercise is taking place as Prime Minister Narendra Modi on August 15 announced next-Generation GST reforms by Diwali. This will reduce taxes on daily essentials, benefiting MSMEs, local vendors, and consumers, while simultaneously stimulating economic growth and creating a more efficient, citizen-friendly economy.

Published on August 25, 2025