First got relief from GST, now will get relief from inflation; SBI report revealed

Business News: There is going to be a big change in GST rates, which will reduce the tax on common household goods and services . This can reduce retail inflation by 0.65 to 0.75 percent in the next financial year (2025-26). According to a report by SBI Research, inflation in the country will reduce after the implementation of the new GST rules

In the 56th meeting of the GST Council, the old four-tier tax structure (5%, 12%, 18%, 28%) was removed and a two-tier tax structure (5% and 18%) was approved. Also, a special tax rate of 40% has been fixed for some luxury goods and services, under which many everyday items have become cheaper and some have become tax free.

When will the new rates be applicable?

The new tax rates, except tobacco and related products, will come into effect from 22 September 2025. The report says that the GST rate of 453 goods has changed. Out of these, tax has been reduced on 413 goods, while tax has increased on only 40 goods. GST on about 295 essential goods has been reduced from 12% to 5% or 0%. Due to this, customers will get 60% benefit especially on food items, due to which the Consumer Value Index based inflation can be reduced by 0.25 to 0.30%.

What will be the impact on retail inflation?

Apart from this, rationalizing GST rates on services will further reduce retail inflation on other goods and services by 0.40 to 0.45 percent, the SBI research report said. In this, customers are estimated to get a benefit of 50 percent. According to the report, overall, retail inflation may come down by 0.65 to 0.75 percent during the financial year 2026-27.

What is the average rate of GST?

Due to the rate rationalization by the GST Council, the average GST rate in September 2019 came down from 14.4% to 11.6%. Now after the new changes, it can be further reduced to 9.5%. The new GST rules will make essential goods and services cheaper, which will reduce inflation and benefit the common people.