New Delhi, September 5 (HS): The State Bank of India (SBI), in its latest research report, has estimated that the recent rationalization of Goods and Services Tax (GST) rates could lead to a minimum revenue loss of ₹3,700 crore. By contrast, the central government projects the net fiscal impact of GST restructuring at around ₹48,000 crore annually.

According to the report released on Friday, the likely revenue shortfall will not affect the fiscal deficit, thanks to rising consumption and economic growth. It noted that rationalizing GST slabs is expected to significantly enhance cost efficiency and have an overall positive impact on the banking sector.

The report highlighted that the effective weighted average GST rate has fallen sharply from 14.4% at the time of GST’s rollout in 2017 to just 9.5% now. Essential goods—nearly 295 items—have seen GST reduced from 12% to 5% or zero, which could bring down retail inflation (CPI-based) by 0.25–0.30% in FY 2025-26. Looking ahead, CPI inflation is projected to remain contained between 0.65–0.75 percentage points through FY 2026-27.

Earlier this week, the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, approved a major restructuring of the tax framework. The existing four-tier system has now been replaced by a two-tier structure: 18% and 5%, with a higher 40% rate reserved for select goods and services. The new rates will take effect from September 22, coinciding with the start of Navratri.

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Hindusthan Samachar / Jun Sarkar