GST Rationalisation Plan Gains Momentum

Reports suggest that India may soon rationalise the Goods and Services Tax (GST) into two major slabs — 5% and 18%, along with a 40% sin tax for products like tobacco and luxury items. This potential change is being seen as a landmark step toward simplifying the tax system and boosting economic growth.

According to Emkay Global, the move would be a massive positive for India, serving as a consumption stimulus, improving ease of doing business, and encouraging greater formalisation of the economy.

Why GST Rationalisation Matters

Currently, multiple GST slabs make compliance complex for businesses. Reducing the structure to just two primary slabs will not only make taxation easier but also reduce the cost-benefit of evasion, pushing more businesses into the formal economy.

Emkay Global highlighted that such reforms could transform India’s consumption story, benefiting both companies and consumers.

Also Read: GST 2.0 Sparks Hope for Consumption-Led Growth

Sectors Likely to Benefit

If implemented, several key sectors are expected to see a direct boost:

• Consumer Staples – Higher demand and lower raw material costs.

• Automobiles – Better affordability driving sales.

• Cement – Stronger housing and infrastructure demand.

• Hotels & Retail – Increased discretionary spending.

• Consumer Durables & Electronics (EMS) – Rising demand, especially for products like ACs.

• Logistics & Quick Commerce – Greater efficiency with simplified tax structures.

This broad-based benefit indicates that GST rationalisation could trigger growth across consumption-driven industries.

Outlook Ahead

If the government finalises the two-slab GST structure, it could pave the way for a more efficient tax regime. Investors and businesses alike are watching closely, as the move is expected to lift earnings outlook for several sectors and support India’s growth momentum.

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