The government on Tuesday urged industry, consumers, and markets to avoid speculation over possible Goods and Services Tax (GST) rate cuts, stressing that decisions on such matters are taken collectively by the GST Council, which includes representatives of both the Centre and the States.
Warning that premature discussions could give rise to baseless rumours and trigger market volatility, the government advised all stakeholders to await official announcements after the Council’s two-day meeting scheduled for September 3 and 4.
The appeal comes amid reports that consumers are deferring big-ticket purchases — including white goods such as refrigerators and televisions, as well as automobiles — in anticipation of lower GST rates. The automobile sector, already grappling with a steep fall in sales enquiries, has pressed the government to expedite implementation of new rates so that demand can recover before the festive season kicks off in the latter half of September.
The slowdown follows Prime Minister Narendra Modi’s Independence Day announcement of “next-generation GST reforms” and rate rationalisation. Since then, anticipation of an 8–10% reduction in prices for small cars and two-wheelers has led to double-digit declines in sales, according to industry executives. “Sales have fallen in double-digit figures since the GST rate cut news started circulating. It is very important that this matter is taken seriously,” said the CEO of a leading car manufacturer, who expressed hope for a quick resolution.
If cleared, the upcoming GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, will usher in one of the largest structural reforms since the tax’s rollout in 2017. Under the proposed revamp, the multiple-rate structure will be consolidated into a simpler two-tier system. Goods and services will be classified into two slabs — 5% and 18% — with only a handful of items such as tobacco and pan masala continuing to attract higher “sin” rates.
As much as 99% of items currently taxed at 12% will move to the lower 5% slab, officials said. The restructuring is anchored on three principles: resolving inverted duty structures, rationalising rates to reduce the number of slabs, and easing compliance, especially for small and medium enterprises. “The Group of Ministers has carefully analysed sectoral data, consumer demand patterns, and compliance burdens. Most aspirational goods like televisions and refrigerators are likely to fall under the 5% or 18% slab. The restructuring is aimed at benefiting the aspirational middle class,” a senior finance ministry official said.
Economists believe such a reform could boost consumption, improve compliance, and enhance tax buoyancy by creating a more predictable and uniform rate structure. However, the immediate challenge remains restoring consumer confidence and stabilising sales in key sectors until the Council’s decision is formally announced and implemented.