Synopsis : All eyes are on the upcoming GST Council meeting as reports hint at the removal of the 12% slab, potentially making ACs, tractors, and term insurance cheaper. Market watchers like Nomura expect these changes to boost affordability and demand across key sectors.
A major GST shake-up could be around the corner as the GST Council gears up for its next meeting in the coming weeks, with rate rationalisation high on the agenda. Despite multiple discussions since the 45th GST Council meeting in 2021, a consensus on GST rate restructuring has remained elusive, but fresh signals indicate change may finally arrive.
Reports suggest the Council may remove the 12% GST slab, shifting goods either to the 5% or 18% bracket. This move could directly impact categories like tractors, air conditioners, and term insurance, making them more affordable for consumers and driving sectoral demand.
According to Nomura, tractors, currently under the 12% slab, may move to 5%, enhancing affordability and benefiting demand, particularly amid upcoming TREM-IV emission norms. This could positively impact key tractor makers like M&M by improving operating leverage while passing on tax benefits to consumers.
For ACs, currently taxed at 28%, any potential rate cut would help offset the upcoming BEE norms set to raise costs by 3-5% from January 2026, aiding brands like Voltas and Havells. Similarly, the government may consider cutting GST on pure term insurance plans from 18% to 5%, reducing the cost of protection while allowing insurers to retain input tax credit benefits.
Meanwhile, the compensation cess, set to expire by March next year, may be replaced with a new Health Cess and Clean Energy Cess. While Nomura does not expect a reduction in large car and SUV taxes post-cess expiry, the structure of revenue sharing with states could see changes.
As the meeting nears, stakeholders across industries and consumers are watching closely, hoping that this long-anticipated GST rationalisation could bring meaningful price relief and boost demand across vital sectors of the Indian economy.
Disclaimer : This article is for informational purposes only and does not constitute financial or tax advice.
