Archive · 20 Aug 2025
GST 2.0 to Boost Consumption, Revenue, and Curb Inflation
The GST 2.0 tax changes are expected to help people spend more money.
While there might be some initial loss of tax revenue, economists believe it will boost spending by a lot, about Rs 5.5 lakh crore.
This increased spending should also bring in more tax money later.
The changes will lower the tax on things people need, like food and clothes, which may cause a small decrease in the overall cost of things.
In the past, the government has often collected more tax revenue than planned.
GST 2.0 reforms projected to boost consumption by Rs 5.5 lakh crore.
The reforms are estimated to generate an additional Rs 52,000 crore in GST revenue for FY26.
SBI Research projects a revenue loss of Rs 45,000 crore from GST 2.0 in FY26.
Reduction in GST on essential items may lead to a 10-15 basis point reduction in CPI inflation.
Overall CPI inflation is expected to be moderated by 20 to 25 basis points.
- Who
- SBI Research.
- What
- The economic impact of GST 2.0 reforms, including consumption boost, revenue changes, and inflation.
- When
- FY26, with analysis of past tax revenue trends.
- Where
- India.
- Why
- To analyze the economic impact of GST 2.0 and other fiscal measures.
Concerns
Outcomes
Fiscal Effects
Concerns
Potential for government fiscal projections being compromised.
Outcomes
Increase in consumption expenditure
- Consumption Boost
- Rs 5.5 lakh crore
- Additional GST Revenue (FY26)
- Rs 52,000 crore
- Projected Revenue Loss (FY26)
- Rs 45,000 crore
- CPI Inflation Reduction (Essentials)
- 10-15 basis points
- Overall CPI Inflation Reduction
- 20-25 basis points
Sources
Reading Between Red Lines: Is Vote Populism Jeopardising India's Tax Growth?
India’s GDP projected at 6.7% in Q1 FY2026 compared to 7.4% in Q4 FY2025: ICRA
ITR filing deadline for AY 2025-26 to be extended again? Key reasons
The tax that eats your gains even before you make them; expert explains investors' growing burden
Indian Economy Is Expected To Grow At 6.7 per cent In April-June Period Of Current Fiscal: Icra
India@79: Rising Economy, Lingering Gaps
People as capital: The soul of India’s economy lies in the unorganised sector - Telegraph India
Job to do: Editorial on India's goal for global prominence - Telegraph India
GST 2.0 rationalisation expected to boost consumption by ₹1.98 lakh crore: SBI report
GST 2.0 to unleash consumption boost, higher tax revenue, lower inflation