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Poosarla Sai Karthik

Tech guy with a busi... • 21d

India is planning to change the GST system from four slabs to just two. The 12% slab will come down to 5%, the 28% slab will drop to 18%, and luxury or sin goods could be taxed at a new 40% rate. This is one of the biggest tax changes since GST started and it could bring several visible effects. In the short term, we could see people spending more as prices go down on many common goods. Small businesses and local retailers may benefit from easier compliance, which could boost their sales. The mid-range “affordable luxury” segment may grow as some customers move away from very expensive products. On the other hand, high-end luxury goods could face price increases, leading to lower demand. State governments may also push back for more compensation, which could slow down the rollout. There are also some clear risks. The government could lose revenue in the short run, which might affect public spending. Some companies might keep the GST savings as extra profit instead of passing it on to customers. Higher taxes on luxury and sin goods might push some buyers toward grey-market products. And if consumer demand doesn’t rise as expected, the economy might not recover the lost tax revenue. States that depend heavily on GST collections could feel the pressure. If implemented before Diwali, this change would be permanent. The real test will be whether lower taxes on essentials truly help people while balancing the needs of the economy and government finances.

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