GST reform to boost consumption, reduce govt revenues: Moody's

Lower prices will also help keep inflation at bay, Moody's said

- OUR CORRESPONDENT

NEW DELHI: Moody's Ratings on Tuesday said the GST reform that has lowered tax rates on 375 items is another form of fiscal policy support for households and will stimulate consumption.

The rating agency also pointed out that the reforms will reduce government revenues.

A decline in India's effective GST rates will likely boost private consumption and support economic growth at a time that the country faces external pressures from higher US tariffs, Moody's said in a report.

The GST Council, in its meeting last week, approved to make Goods and Services Tax (GST) a two-tier structure of 5 per cent and 18 per cent, with a special rate of 40 per cent on tobacco and related products and ultra-luxury items.

The new rates will be effective September 22, barring tobacco and related products, which would continue to be taxed at 28 per cent plus a compensation cess till December 31.

Currently, GST is levied in the slabs of 5 per cent, 12 per cent, 18 per cent and 28 per cent.