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Informist, Tuesday, Oct. 6, 2026

 

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--Fin min source: GST revenue stabilised post rate cuts in Sept 2025 
--Fin min source: Consumption held up, base widened post GST rate tweaks 2025 
--Fin min source: Will now make GST rate changes once per year 
--Fin min source: GST rate changes to take effect from Apr 1 hereon 
--Fin min source: To roll out 57th GST Council decisions in phases in 2027 
--Fin min source:Avg domestic GST rate 13.13% post 2025 cut vs 14.55?rlier
 

 

NEW DELHI – The GST Council will limit goods and services tax rate changes to once a year, a senior finance ministry official said. The council will also align GST rate changes with the beginning of a financial year, which starts on Apr. 1, the official said Tuesday. 

The GST Council will hold its upcoming meeting Thursday, where it is likely to introduce a range of procedural reforms to simplify businesses' operations under the GST regime, support the small-enterprise ecosystem and promote exports of services, which would generate foreign exchange for India. 

The decisions the council takes Thursday will be implemented in phases through 2027 so businesses and systems have time to adjust, the official said. However, a host of the changes will be implemented from April onwards, the official added.

 

Notably, the council's agenda for Thursday's 57th meeting Thursday does not include rate changes. In September, at its last meeting, the GST Council overhauled the indirect tax regime by replacing the four-slab GST structure of 5%, 12%, 18%, and 28% with a two-slab structure of 5% and 18%. The council also introduced a new 40% GST rate for sin and luxury goods. The GST Council based the tax changes on consumption data for 2023-24 (Apr-Mar), the latest available full-year bifurcated data on item-wise GST paid by consumers. 

A year after the rate changes, consumption has held up and the tax base has widened, the finance ministry official said. Revenue has also stabilised, the official said. "The revenue shock that was feared did not occur. Revenue has been positive all through the 12 months. In fact, in the last 4 months, there has been acceleration in revenue growth," the official said.

 

At the time of rolling out the GST rate changes last year, the government had estimated a net revenue loss of INR 480 billion, which it had hoped would be offset by higher domestic demand and GST collection from the 40% GST rate, which applies to aerated drinks, non-alcoholic beverages, large cars and motorcycles, and tobacco products, among others.

 

In the first six months of FY27, GST collections grew 11.6% to INR 12.46 trillion, compared with the Budget's projected 6.3% year-on-year growth.

 

The average GST rate for FY24 was 11.6%, well below the revenue-neutral rate of around 15% estimated when the GST regime was introduced in 2017. According to the official, the effective tax rate on domestic taxable supplies had fallen to 13.13% before last year's GST cuts, from 14.55%. The average GST rate for gross GST, including exports and domestic supplies, is, however, "much less", the official said. 

 

"The single biggest change to the rate structure was completed last year, so rates can be left alone," the official said, referring to Thursday's meeting. Beyond reforms to GST processes, including registration, returns, refunds, and litigation, the council also plans to remove tax officials' power to arrest in relation to GST-related offences such as fake invoicing and fake input tax credit. The council will consider decriminalising 10 provisions, softening 24 and retaining 11 provisions under the GST law. The council will also consider raising the prosecution threshold to INR 50 million from the current INR 10 million.

 

The aim of decriminalising these provisions is "not removing the power (of arrest) entirely, but the route to arrest must be through law enforcers and not a tax official," the official said.

 

The council, chaired by Finance Minister Nirmala Sitharaman, is mandated to meet once every three months, but this is the first meeting in more than a year. The meeting was originally scheduled for Sept. 12 but was postponed to Oct. 7 due to the BRICS Summit in New Delhi. The meeting was postponed again by a day, to Oct. 8, reportedly due to a clash with the Reserve Bank of India's Monetary Policy Committee decision announcement.  End

 

Reported by Priyasmita Dutta

Edited by Saji George Titus

 

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