CHENNAI: The government is moving quickly on its plan to overhaul the Goods and Services Tax (GST), and the much anticipated rate cuts could come sooner than expected. Instead of waiting until Diwali, reports suggest the rollout may happen around late September, timed with the start of the Navratri festive season.
According to industry sources, any delay in implementation could hurt the markets, as many people have already deferred purchases. The move to advance the rollout is therefore in line with industry expectations.
The reform, often referred to as “GST 2.0,” will be one of the biggest changes since the tax was introduced in 2017. The key idea is to simplify the structure by reducing the current four tax slabs (5%, 12%, 18% and 28%) into two main ones—5% for essentials and 18% for most goods and services. A higher 40% rate will stay only for luxury and sin goods.
This change is expected to make everyday items cheaper. Almost all products in the 12% category could move to 5%, and most in the 28% category may drop to 18%. That means consumers will feel the difference during festive shopping, with goods ranging from home appliances to packaged foods likely to cost less.
According to reports, the GST Council will meet on September 3–4, earlier than the previously announced timeline at the end of September, to finalise the details. If approved, the new rates could be notified quickly and come into effect by September 22, just in time for Navratri.
Economists say the reforms could give a strong boost to consumption and add nearly 0.6 percentage points to GDP growth in the coming year. But the move will also hit government revenues by almost $20 billion annually. The Centre hopes this loss will be partly offset by higher spending and better compliance.
Most states have welcomed the plan, though some have asked for compensation to make up for their expected revenue shortfall. Meanwhile, the government is also considering exempting health and life insurance premiums from GST, which could ease costs for policyholders.
In the market, both retailers and consumers are waiting for clarity. Many buyers have already delayed their festive purchases, hoping for lower prices once the new rates kick in. Businesses believe an earlier rollout—before Navratri—would help revive demand and give festive sales a strong push.
If all goes as planned, households could see a lighter tax burden and businesses may enjoy stronger demand well before Diwali, setting the stage for a more vibrant festive season.