The upcoming GST Council meeting is scheduled for June 20, two weeks ahead of the budget presentation by Finance Minister Nirmala Sitharaman. Worried that the ongoing GDP growth deceleration may pick up pace, some states are favouring a reduction in tax rates and have communicated their concern to the Centre.
Most consumer goods companies reported a hit in March quarter earnings, mainly on account of a rural slowdown and weak consumer sentiment, according to an analysis. In order to revive the economy, the RBI last week cut repo rates for the third consecutive time – now down to a nine-year low – and changed its stance to ‘accommodative’.
Further reducing the number of goods incurring the highest GST rate may also spur demand. Consider automobiles, for instance. Apart from a 28 per cent GST rate, the category also faces a compensation cess, depending on size and segment. A lowering of rates will reduce prices and possibly encourage consumers to loosen their purse strings.