PTI Kolkata

The State Bank of India (SBI) in its latest research report said that reforms in GST through reduction in rates will cause a minimal revenue loss of Rs 3,700 crore.The government estimates the net fiscal impact of GST rates rationalisation will be Rs 48,000 crore on an annualised basis. According to the report, given the growth and consumption boost, the minimal revenue loss is estimated at Rs 3,700 crore and will have no impact on the fiscal deficit.

At the 56th meeting of GST Council held few days ago, the current four-tier structure has been replaced with a two-tier one, with a standard rate of 18 per cent and five per cent, and de-merit rate of 40 per cent on selected few goods and services.The report said that the GST rate rationalisation will largely have a positive impact on the banking sector due to meaningful cost efficiencies.

GST rate rationalisation has also brought down the effective weighted average rate from 14.4 per cent at the time of inception in 2017, which is expected to come down to 9.5 per cent, the report said.When GST was introduced, the four rates were five per cent, 12 per cent, 18 per cent and 28 per cent.GST 2.0 to cause `10,664-cr shortfall in IGST receipts: GTRI 

The Central government is expected to face a revenue shortfall of Rs 10,664 crore in Integrated Goods and Services Tax (IGST) receipts due to the recent GST rate rationalisation, according to an analysis report by the Global Trade Research Initiative (GTRI). 

The report provided a detailed picture of how the revised GST rates will impact government revenues through taxation on imports. It stated "the combined effect of cuts and hikes produces a net shortfall of about Rs 10,664 crore in IGST receipts". The report noted that a significant portion of GST revenue comes from imports.

In FY2024-25, IGST on imports alone contributed Rs 5,33,000 crore, which was about 24 per cent of India's total GST collections of Rs 22,08,861 crore.

Since imports are taxed directly at the border under IGST, the report stated that the customs data becomes the most effective tool to study the financial impact of tax changes. India's merchandise imports in FY2024-25 were valued at USD 721.2 billion. Out of this, the latest GST revisions directly cover goods worth USD 88.78 billion, or about 12.3 per cent of the total import base.