NEW DELHI: The sweeping changes in Goods and Services Tax (GST) rates announced by the government may have only a minor impact on public finances, with the fiscal burden on the Centre expected to be just Rs 18, 000 crore, according to a report by global brokerage Bernstein on Thursday.
This amounts to only 0.05 per cent of India’s projected GDP for FY26, the report said.
On September 3, the government unveiled major GST reforms, reducing the number of tax slabs and lowering rates on a wide range of goods.
From daily-use FMCG items to cars, white goods, and insurance, most products are set to become cheaper from September 22.
Analysts believe these measures will stimulate demand, improve tax compliance, and give a strong push to consumption-led growth.
Bernstein’s latest India Strategy Note highlights that while the reforms will lead to a short-term revenue hit, the overall impact on the economy remains limited.
The brokerage estimates a revenue loss of Rs 79, 600 crore due to rationalising the 12 per cent slab to 5 per cent, and another Rs 1.12 lakh crore from scrapping the 28 per cent slab.
These losses will be only partially offset by gains of Rs 700 crore from the 12 to 18 per cent shift and Rs 15, 000 crore from moving certain items from 28 to 40 per cent.
Taking into account these changes, the combined revenue loss for the Centre and states is expected to be around Rs 1.57 lakh crore.
The Centre’s share comes to about Rs 74, 000 crore. Bernstein further assumes a 5 per cent cut in capital expenditure, worth Rs 56, 000 crore, to balance the revenue shortfall.
As a result, the actual fiscal burden for the Centre narrows to Rs 18, 000 crore.