Every year we wait for brands to offer discounts during Diwali to make our long-pending purchases. But this year, even before companies could do it, the GST Council has already announced what PM Modi calls a Diwali Dhamaka. India rolled out the Goods and Services Tax in 2017, with tax slabs of 5%, 12%, 18% and 28%. Apart from these, there was also an additional component called compensation cess, which resulted in final tax rates of even 50% on some goods.
Now, the GST Council has decided to put most goods in just two slabs: 5 per cent and 18 per cent. There will also be a 40 per cent slab for a handful of items, replacing the 28 per cent plus cess basket.
GST reduction benefits
That’s about the change in the GST structure. What does it mean for you? Since most goods and services are being moved to a lower tax rate, it effectively lowers the price of most items. That means the consumer is going to save a lot once the new rates kick in on September 22. TVs, ACs, cars, small bikes, stationery, dairy products and insurance – the list of goods and services set to get cheaper is long.
Implementation of GST cut
But the big piece of the puzzle is, will companies pass on the rate cut benefit to the consumer? Speaking at an event in Delhi, Commerce Minister Piyush Goyal urged companies to pass on every single rupee of GST cut benefits to the consumer. To ensure that, the government is already collecting price data on a wide range of items. It also plans to monitor the implementation of the reduced rates and to run a campaign to increase awareness.
GST & government revenue
While this is great news for companies and consumers, what does it mean for government revenue? Based on FY24 consumption numbers, the rate cuts could translate into potential revenue losses of ₹48,000 crore. However, the government expects the boost to demand, especially during the festive season, could partially offset the revenue loss. Economists say this demand could also help offset the impact of the 50% US tariff on Indian goods.
India-EU FTA Talks
Talking of tariffs, after the US tariff shock India has sped up its efforts to widen its trade partnerships. As part of that push, India is now working with the European Union for an early conclusion of the proposed free trade agreement between the two sides.
This week, Prime Minister Narendra Modi spoke with top EU leaders, President of the European Council Antonio Costa and President of the European Commission Ursula von der Leyen. A readout from India after the call said the leaders reaffirmed their shared commitment to an early conclusion of the India-EU FTA negotiations.
Semiconductor push & Vikram-32
The week also marked a milestone in India’s semiconductor manufacturing journey. At Semicon India, the annual summit of the sector, Electronics and IT Minister Ashwini Vaishnaw presented India’s first indigenously built Vikram-32 bit processor chip to Prime Minister Narendra Modi. The Vikram-32 chip was developed and designed by ISRO for space launch vehicles. Launched in March this year, the chip has been successfully validated in space during the PSLV-C60 mission.
iPhone 17 & new Apple stores
The American tech giant is expected to launch its iPhone 17 series on 9 September. Apple’s mysterious invite for the event has branded it as “Awe Dropping,” with a fiery animated Apple logo.
Ahead of this big event, Apple has opened two new stores in India, one in Bengaluru and another in Pune. Announcing it on social media, Apple CEO Tim Cook said the company was thrilled to continue bringing the best of Apple to customers across India.
Week's market action
Indian equities ended the week in the green, largely boosted by the GST cheer. The Sensex gained around a per cent for the week, ending around 81,000. The Nifty also inched closer to the 25,000 mark. In the currency market, the rupee continued to trade weak, at over 88 to the dollar.
