A big GST stimulus: Now for the market response

Rate and slab reduction could stimulate consumption in support of India's economy. This is clearly a market-oriented reform, even if an ideal GST regime remains a work-in-progress

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At long last, India's goods and services tax (GST) regime is set for a dearly needed reset, slated for 22 September, after the GST Council approved a slew of changes that generously reduce tax rates as well as rate slabs, easing not just its burden of payment, but also of compliance.

Whether all Indian states would play ball had been unclear, given their revenue concerns, but to the credit of finance minister Nirmala Sitharaman, unanimity prevailed on the thrust of this reform. Our GST structure will soon have just two slabs of 5% and 18%, plus a 40% slab for a few odd 'sin' and luxury goods. As across-the-board easing spells relief, so does a chapter being closed on a legacy muddle: an add-on cess to pay off a loan for shoring up state revenues. Only a few small-ticket 'sin' items will bear a cess to clear what little is left of the loan's dues before we bid this bit of complexity good riddance.