GST Rate Cut Likely: What FM Nirmala Sitharaman Just Revealed
GST rate cut could be on the cards soon. Finance Minister Nirmala Sitharaman recently stated that “the expectation is that it will come down,” during an interaction with business leaders — sparking speculation of a fresh round of tax relief for Indian consumers and businesses.
With the GST Council scheduled to meet next, here’s what you need to know about this potential policy shift.
What Did the FM Actually Say?
During a media interaction in June 2025, FM Nirmala Sitharaman remarked:
“Over the years, GST collections have been robust, and the system is stabilising. The expectation is that the rates will come down — and they should.”
This suggests a possible rationalisation of GST slabs or a downward revision for certain categories — especially mass consumption goods and essential services.
Why Is a GST Rate Cut Being Considered?
There are multiple reasons:
- Record GST revenue collections: Monthly GST receipts have consistently crossed ₹1.6 lakh crore in 2024–25.
- Fiscal room: The Centre and States are seeing better tax buoyancy.
- Inflation control: Lower indirect taxes can reduce the retail price of goods and services.
- Ease of doing business: Simplifying and lowering GST rates helps MSMEs and consumers.
Current GST Rate Structure (2025)
| GST Slab | Common Items Covered |
|---|---|
| 0% | Unbranded food, milk, fresh vegetables |
| 5% | Edible oils, footwear (<₹1,000), economy services |
| 12% | Processed food, mobile phones, business-class rail travel |
| 18% | Most services, electronics, branded garments |
| 28% | Luxury goods, sin items (tobacco, aerated drinks) |
👉 A rate cut is most likely in the 12% or 18% category, according to industry analysts.
Which Sectors May Benefit From GST Rate Reduction?
Here are some sectors that could benefit if GST rates are cut:
- Textiles & Apparel: To boost domestic demand and exports.
- Home Appliances: Items like fans, mixers, washing machines may move from 18% to 12%.
- FMCG Products: Shampoo, soap, toothpaste — currently at 18%.
- Restaurants: There’s lobbying to lower 5%/18% dual rates depending on premises.
What Will Be the Process for GST Rate Cut?
Any reduction will go through the following steps:
- Recommendations by Fitment Committee
- Deliberation by GST Council
- Announcement via official Notification
- Effective Date declared (usually 7–14 days later)
📘 As per Article 279A of the Constitution, only the GST Council can recommend changes in tax rates.
Expert View: “Relief Is Timely, But Must Be Balanced”
CA Ramesh Nair, a Chennai-based GST practitioner, notes:
“While lower rates are welcome, the government must ensure it doesn’t impact overall revenue or compliance complexity. A clean 3-slab model is the ideal long-term goal.”
Legal Basis for GST Rate Changes
- CGST Act, 2017 – Section 9 empowers the government to notify rates on the GST Council’s recommendation.
- GST Council Meetings (under Article 279A) are the formal platform for such decisions.
- All changes are notified through official GST rate notifications published on CBIC.gov.in.
When Will the Next GST Council Meeting Be Held?
Though no official date has been announced, sources indicate the next GST Council meeting is likely to take place before the end of July 2025.
👉 Keep an eye on Efiletax for real-time updates on GST Council decisions.
What Should Businesses and Consumers Do Now?
- Track notifications: Subscribe to GST updates from trusted platforms like Efiletax.
- Plan inventory: Businesses may consider delaying large procurements if a rate cut is likely.
- Update pricing models: Especially if you’re in FMCG, retail, or consumer durables.
FAQs on GST Rate Cut News
Q1. Has the government officially announced a GST rate cut yet?
No. The FM’s comment is an indication. Final decision will come from the GST Council.
Q2. Will GST on essentials like shampoo and soap come down?
Possibly — these are currently taxed at 18% and may move to 12%.
Q3. Who benefits most from a rate cut?
Consumers, MSMEs, and sectors like textiles, FMCG, and appliances.
Q4. Where to check official notifications?
Visit the CBIC’s Notification Page for latest rate changes.
Summary
GST rate cut likely soon, hints FM Nirmala Sitharaman. With record collections and inflation concerns, key sectors like FMCG, home appliances, and textiles may see lower GST. Final decision to come from the GST Council soon.
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