Global investment bank Morgan Stanley notes that the rationalisation of the Goods and Services Tax (GST) structure, approved by the GST Council, is expected to significantly boost consumption in the coming months, coinciding with the onset of the festive season.
In its latest research report, the firm highlighted that the shift from the existing four-tier GST rate system to a simplified two-rate structure of a standard rate of 18 per cent and a merit rate of 5 per cent, will make a range of goods and services more affordable for consumers.
A special demerit rate of 40 per cent will continue for a select few items such as tobacco products and luxury goods. "We expect the improved affordability to give a fillip to consumption, especially as the new GST tax structure is effective from the start of the festive season," the report said, adding that the indirect tax reduction would help lift demand in a broad-based manner, particularly benefiting low-income households.
The new GST rates are set to come into effect from September 22, in line with Prime Minister Narendra Modi's announcement during his Independence Day address about next-generation GST reforms aimed at simplifying the tax regime and benefiting consumers. -- ANI
