According to the report, In 23rd GST Council Meeting, the Council had decided to lower tax rates nearly on 200 items could bring down inflation by 20 basis points from the current level, based on lower food and beverage prices.
Retail and CPI inflation increased to 3.58 percent in the month of October due to increase in prices of food items, especially in vegetables.
According to the global financial services Nomura Report, the Central government recast the tax rates of nearly 213 items in 23rd GST Council Meeting which includes 178 items of frequent use, it is anticipated that CPI inflation brings down nearly by 20 basis points (0.2 percent).
“The government expects these (GST) measures to be disinflationary. Our quantitative analysis suggests that if (a big if) the GST tax changes are fully passed on to consumers, they would lower CPI inflation by estimated 20 basis points”, says report. By adding that, “This would be driven by lower food and beverage (chocolate, condensed milk, etc), household goods (detergent, sanitary ware and glassware) and personal care (shaving products, shampoos, and cosmetics) prices.”
During 23rd GST Council Meeting which was held in Guwahati, the government reduced tax rates of 213 items. From a total of 228 items, 178 items were moved to 18 percent tax bracket.
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Tax rates on items such as chocolates, beauty products, chewing gums, wigs and wristwatches were reduced to provide relief to small business enterprises (SMEs) and taxpayers.
Nearly 178 items were moved from higher slab bracket 28 percent to 18 percent, whereas a uniform 5 percent tax was decided for all restaurants both air-conditioned and Non- AC. The new tax will come into effect from 15th November.
