India has cut Goods and Services Tax (GST) rates to spur consumption and soften the blow of steep US tariffs, BBC reported.
Finance Minister Nirmala Sitharaman said the tax structure has been simplified to two slabs—5 percent and 18 percent—with a 40 percent levy on cigarettes. Essentials like food, school supplies and insurance will become cheaper, while imported liquor and premium cars will cost more. The new rates take effect on 22 September, ahead of the festive season.
Markets cheered the move, with analysts saying lower taxes could lift demand, ease inflation and support corporate earnings, though states fear revenue losses of up to $6bn.
The cuts follow earlier income tax relief and coincide with lower borrowing costs. Economists believe stronger consumption could offset losses and cushion the impact of President Donald Trump’s 50 percent tariffs on Indian goods, according to BBC.
Prime Minister Narendra Modi called the reforms a promise delivered, saying they will benefit farmers, the middle class, small traders and youth while making business easier.
