Informist, Wednesday, Sept. 3, 2025

NEW DELHI – The changes to the Goods and Services Tax regime are expected to have a net revenue impact of around INR 480 billion, Revenue Secretary Arvind Shrivastava said Wednesday, after the GST Council approved a two-slab rate structure with a special tax of 40%, to be effective from Sept. 22.

"Net revenue implication of this proposal is expected, we have estimated it to be around 48,000 crores (INR 480 bln). This is on the consumption base of 2023-24," Shrivastava said.

"Looking at a particular number of revenue implication and highlighting it in a manner which is not proper may not present the correct picture of this exercise," Shrivastava said at a press conference after the GST Council meeting.

Shrivastava said the government believes the overhaul of the GST regime will be fiscally sustainable for both the central government and states. The net fiscal impact from the GST regime changes estimated by the government is on the lower end of what experts had projected before the GST Council meeting. Experts had pegged the potential revenue loss from the GST overhaul between INR 600 billion and INR 2 trillion annually.

The government expects buoyancy to play a major role in enhancing revenues after the GST rate rationalisation, Shrivastava said. There will be an effect on consumer behaviour with prices expected to "get positively influenced" by the rate rationalisation exercise, he added.

"There is a technicality that when the rates change, the rate of the value chain itself changes and tax is paid through ITC (input tax credit) and cash. The actual implication of that will have to be worked out," the revenue secretary said.

Finance Minister Nirmala Sitharaman ruled out plans to compensate states for potential losses from the GST changes. "Even the Centre is losing, if anything, Centre is losing more," Sitharaman said at the press conference. "In the GST Council, the Centre and states are together in it. Nobody is a donor and nobody is a donee in the GST Council." End

Reported by Priyasmita Dutta, Sagar Sen, and Shubham Rana

Edited by Deepshikha Bhardwaj

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