Can a simpler GST help India offset hit from Trump tariffs?
Essential goods, including food, medicines, and education-related products, will face either zero or a five per cent tax. Consumer durables such as TVs and washing machines will fall into the 18 per cent bracket. A limited set of demerit goods, including tobacco, will carry a 40 per cent rate.The overhaul could put more money in the hands of consumers, boost business sales, and improve tax compliance. Markets have welcomed the change. Indian equities, which had lagged behind peers this year, have rebounded, rising nearly two per cent over the past two trading sessions, driven by strong buying in consumer-facing companies like Maruti and Nestle.The reform also carries strategic timing. With US President Donald Trump's new tariffs raising risks for Indian exporters, a domestic demand push could buffer the economy.While US tariffs pose fresh challenges for Indian exporters, recent trade data offers a buffer. Between April and July, India's exports to the US jumped 22 per cent, pushing the bilateral trade surplus to USD 16 billion. Imports from the US rose at a slower pace of 12 per cent, underscoring India's continued export competitiveness in its largest market. This external momentum strengthens the case for a domestic consumption boost through GST reforms—helping balance foreign risks with internal resilience.Big picture: GST, introduced in 2017, was meant to unify India's fragmented tax system. However, the creation of multiple slabs created compliance headaches. Businesses have lobbied for a simpler structure for years.PM Modi's move is being framed as GST 2.0, a shift from complexity to clarity. If approved by the GST Council this fall, it could become one of the most significant economic reforms of his third term, on par with the original rollout eight years ago.Risks: Cutting rates could dent state revenues in the short term. The government is betting that higher compliance and growth will offset the gap. A group of ministers tasked with overhauling the system in 2021 had already recommended fewer brackets and a lower 'revenue-neutral rate', the benchmark meant to protect government receipts. That rate has steadily declined, to 11.4 per cent in 2023 from 15.8 per cent in 2017, giving policymakers more leeway to simplify the tax without derailing fiscal stability.advertisementWhat's next: The proposal isn't final yet. States must first review the plan and agree. A group of state finance ministers is expected to meet on Thursday to discuss the details. Their recommendations will then go before the GST Council, chaired by Finance Minister Nirmala Sitharaman, which is likely to deliberate in September or October. Any changes would take effect in the current financial year.What they said: 'We are bringing next-generation Goods and Services Tax reforms that will reduce the tax burden drastically across the country,' Prime Minister Narendra Modi said during his Independence Day address.- EndsTune InMust Watch
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
23 minutes ago
- The Hindu
Telangana's next-gen Life Sciences policy to help attract large scale investments
Industries and IT Minister Babu on Wednesday said the next-gen Life Sciences policy that the Telangana government plans to soon unveil will be instrumental in attracting large scale investments. It will be a cutting-edge framework designed to attract large scale investments,' he said, adding that the State is pursuing an ambitious target to scale up its life sciences economy to $250 billion by 2030 and make Telangana the life sciences capital of Asia. The State's life sciences ecosystem is valued at $80 billion and it is the only region in the world to host more than 250 U.S. Food and Drug Administration (USFDA)-approved sites. Telangana is home to over 2,000 companies operating in the Life Sciences domain, Babu said, chairing the 6th board meeting of Telangana Life Sciences Foundation here. ₹54,000 cr. investment The life sciences sector in Telangana has witnessed remarkable growth under the leadership of Chief Minister Reddy. Since December 2023, the State has attracted investments worth ₹54,000 crore in the sector, in the process positioning Hyderabad as a global leader in life sciences. The investments have been across pharmaceuticals, biotechnology, cell and gene therapy, medical devices, vaccines and digital health. Hyderabad now ranks among the world's top seven life sciences clusters and it is the only Indian city to achieve this distinction. Global giants such as Eli Lilly, Amgen, MSD, Zoetis, Evernorth and Olympus have chosen Hyderabad as their preferred hub, he said. The progress made in the last year reflects our strategic commitment to creating a future-ready, knowledge-driven ecosystem. Two lakh jobs Robust policy support, industry-friendly infrastructure and strategic partnerships are factors behind attracting the investments that will result in potential employment generation of more than 2 lakh jobs by companies in areas such as sterile injectables, biosimilars, biologics, AI/ML and advanced healthcare services. The Minister also proposed preparing a feasibility report for establishing the Telangana School of Life Sciences. Board members of the foundation, including Dr. Reddy's Laboratories chairman Satish Reddy, Laurus Labs CEO Satyanarayana Chava, Special Chief Secretary Sanjay Kumar, Telangana Industrial Infrastructure Corporation vice-chairman and managing director and Telangana Lifesciences CEO Shakthi M. Nagappan participated in the meeting, the Minister's office said in a release.
Economic Times
23 minutes ago
- Economic Times
JeM uses E-wallets to bypass FATF, mini camps to evade Indian military strikes
Synopsis Following Operation Sindoor, Jaish-e-Mohammad is employing digital wallets linked to Masood Azhar's family to raise funds, circumventing FATF scrutiny. The terror group aims to establish a vast religious center network, mirroring Lashkar-e-Taiba's strategy, with plans to set up 313 new camps. A significant portion of the raised PKR 3. Agencies New Delhi: Hit hard by India during Operation Sindoor that targeted its headquarters and training camps, Pakistan-based Jaish e Mohamed (JeM) has been trying to raise funds using an elaborate digital wallet network and has been decentralising operations to minimise the impact of further Indian strikes on terror establishments across the tracking the terrorist organisation said that the outfit has drawn up a PKR 3.9-billion plan to establish a vast 'Markaz' or religious centre network that would replicate the modus used by Lashkar-e-Taiba. This includes setting up 313 new camps to make it more difficult for Indian agencies to track terror operations. The money is being raised using digital wallets that are linked to the family members of JeM leader Masood Azar and agencies have identified at least five such wallets with direct links to the proscribed organisation. This approach is being used to avoid scrutiny from international terror watchers like the FATF that has access only to bank records and would not be able to act on contributions made to an elaborate network of family members. Sources said digital wallets like 'EasyPaisa' and 'SadaPay' are being used to collect the funds and these function outside banking networks by allowing wallet-to-wallet and wallet-to-cash transfers. This would make FATF monitoring difficult. Sources added that Azhar's family uses 7 to 8 mobile wallets at any given time and replaces them every four months. After large amounts of money accumulate in the wallets, they are spilt into smaller amounts or are withdrawn as cash. At least 30 new wallets are activated every month. A collection drive for the PKR 3.9 billion plan is currently on, under the garb of creating the Markaz network. Sources however pointed out that by even generous estimates, the total cost of setting up the network would not surpass PKR 1.23 billion. The remaining money is likely to be used for weapon purchases and equipping terrorists aimed at India, with the estimate that this would sustain operations for the next decade.
&w=3840&q=100)
Business Standard
23 minutes ago
- Business Standard
India will respond decisively whenever terrorism threatens citizens: Govt
Anticipating future warfare scenarios through "predictive technologies" and creating precise, targeted systems for counter-action are among the three-fold goals when it comes to India's futuristic defence programme, Sudarshan Chakra Mission, the government said on Wednesday. In a broad synopsis of the country's security scenario, the Press Information Bureau (PIB) on Wednesday shared some data and a summary of various defence-related developments in the past 11 years, titled 'Transformation of India's Defence and Internal Security Posture'. "Unlike in the past, India under the present government has become a global force to reckon with, a nation that speaks on issues from a position of strength," it says. The government said India has adopted a "firm and clear approach towards cross-border terrorism", adding that the pattern of action over the last decade reflects this policy. The most recent and defining operation came in May 2025 with Operation Sindoor. In response to the killing of civilians in Pahalgam, "India gave its armed forces full freedom of action", the synopsis says. Using drones and precision munitions, they struck nine terrorist camps in Pakistan and Pakistan-occupied-Kashmir. More than 100 terrorists were eliminated, including individuals linked to the IC814 hijacking and the Pulwama attack. Pakistan attempted retaliatory strikes through drones and missiles, but Indian counter-drone systems neutralised them, it adds. In his 79th Independence Day address, Prime Minister Narendra Modi described Operation Sindoor as "a new normal", making it clear that "India will respond with full force whenever terrorism threatens its citizens," the synopsis says. Beyond immediate responses, the Modi government is preparing for "long-term threats," the government said. In his Independence Day speech, Modi had announced the Sudarshan Chakra Mission, a futuristic defence programme. "Its goals are threefold -- to ensure the entire system is researched, developed, and manufactured in India; to anticipate future warfare scenarios through predictive technologies; and to create precise, targeted systems for counter-action. By 2035, the aim is to provide a comprehensive national security shield for both strategic and civilian assets," it says. In the last eleven years, India's defence and internal security posture under the government of PM Modi has undergone a "profound transformation", it says. The shift has been marked by "greater clarity of purpose, stronger deterrence, and a sustained drive for self-reliance," the synopsis says. This government has consistently underlined that "national security is non-negotiable", and to ensure this security, India will build its own capacity and preparedness. This has resulted in a "more confident, modern, and proactive approach to challenges, both external and internal". it adds. Firm responses to terrorism, the clear articulation of new normal with Pakistan and futuristic initiatives like the Sudarshan Chakra Mission underscore a "forward-looking security doctrine," the government asserted. India's defence and internal security posture under the Modi government reflects a "decisive shift towards strength, clarity, and self-reliance". With record investments in defence, rapid growth in indigenous production, bold reforms, and the adoption of emerging technologies, India has transitioned from being a major importer to a rising global exporter of defence equipment, it added. "India's defence expenditure has steadily increased under the present government, rising from Rs 2.53 lakh crore in 201314 to Rs 6.81 lakh crore in 202526," the PIB synopsis says. "The focus is no longer only on acquiring weapons but also on building domestic capacity. In 202425, defence production touched a record Rs 1.50 lakh crore, more than triple the 201415 level," it adds. Fighter jets, missile systems, artillery systems, warships, naval vessels, aircraft carriers and a lot more are now being made in India, underlining how strongly "self-reliance and deterrence have become the cornerstone of national security," the government said. Defence exports grew thirty-four times over the last decade, reaching Rs 23,622 crore in 202425. Indian equipment is now exported to over 100 nations, including the United States, France, and Armenia, it said. The synopsis also shared data related to indigenisation efforts. The SRIJAN Portal (2020) enables the industry to locally develop items earlier imported. "To date, over 46,798 items have been listed". And, Positive Indigenisation Lists by DPSUs have identified 5,012 items (across five tranches), "signalling a phased ban on imports", it says. At the same time, progress in internal stability, food and energy security, financial inclusion, and technology innovation demonstrates that Atmanirbharta is "not confined to defence alone" but forms the foundation of a "resilient and confident India prepared to meet both traditional and non-traditional challenges on its path to becoming a global leader", the government asserted. "This tectonic shift reflects the deep resolve of the government to see the country as Viksit Bharat in every sense in the years to come. It also reaffirms that this government does not merely believe in rhetoric, but has actually done, and is continuing to do, what it takes to make India 'Viksit'," it said.
