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Major announcements
The revision of GST slabs is no doubt the biggest announcement that is expected from the 56th GST Council meeting. The Council is expected to overhaul the GST slabs by eliminating the 12 per cent and 28 per cent GST slabs altogether.
The products which fall under these slabs are now expected to move to the next slab. The ones under the 28% slab are expected to be under 18%, and the goods with 12% GST now are expected to be under the 5 per cent.
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Further, the GST Council is expected to continue with the 40 per cent GST slab for ‘sin’ products such as tobacco and other luxury products.
Auto sector in focus
In light of the GST rates revision expectation, the auto sector of India is in focus as it stands to gain from expected GST cuts. According to a Reuters report, the government is preparing to reduce the GST on small hybrid cars and motorcycles from 28 per cent to 18 per cent. According to Jefferies, the SUVs could also see a tax cut from 50 per cent to about 40 per cent.
The cut in GST rate is likely to directly impact the car prices on the road. According to Jefferies, 7-10 per cent GST rate cut can result in a 6-8 per cent fall in on-road prices for most vehicles. This is also likely to boost car sales in the coming quarters. Jefferies projects a 10 per cent annual growth in two-wheelers and 8 per cent in passenger vehicles between FY25–FY28.