Lok Sabha Question No. 4991 (UNSTARRED), answered on 2026-03-23
Subject: GST Rate Rationalisation
Ministry: FINANCE
Asked by: Adv K. Francis George

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA

UNSTARRED QUESTION NO. 4991

## TO BE ANSWERED ON MONDAY, MARCH 23, 2026/CHAITRA 02, 1948 (SAKA)

## GST Rate Rationalisation

## 4991. Adv K. Francis George :

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has undertaken any assessment of revenue and inflationary implications of Goods and Services Tax (GST) rate rationalisation;
- (b) if so, the details of changes made in the GST rate structure and the goods and services affected thereby;
- (c) whether any study has been conducted regarding the fiscal impact, consumption patterns and sectoral growth following rate rationalisation and if so, the details and findings thereof;
- (d) the steps taken by the Government to ensure revenue neutrality and fiscal stability of the States after revisions in GST rates; and
- (e) whether the Government proposes to undertake periodic review of the GST rate structure to balance revenue requirements and consumer welfare and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a) & (b): As per latest data available, gross GST revenue collections have recorded a growth of 8.1%  in  February  2026  as  compared  to  February  2025.  No  formal  study  on  the  inflationary implications of GST rate rationalisation has been conducted.
- (c) While a specific study regarding the fiscal impact, consumption patterns and sectoral growth following  rate  rationalisation  has  not  been  conducted,  however,  the  reduction  in  GST  rates  is expected to provide direct and indirect relief to common people and investors by lowering the tax  burden  on  essential  goods  and  services,  thereby  improving  affordability,  reducing  cost  of living, and supporting household consumption.

The  rationalisation  of  rates  is  also  expected  to  reduce  transaction  costs,  ease  compliance, encourage  greater  formalisation,  and  widen  the  tax  base.  Sector-specific  rate  reductions  are expected to support competitiveness and investment by lowering costs in construction, boosting demand  in  automobiles,  improving  access  to  life-saving  drugs  and  medical  devices,  and promoting labour intensive MSMEs such as toys, handicrafts and man-made fibres.

Recent  trends  in  high-frequency  indicators,  including  higher  e-way  bill  generation,  improved Purchasing  Managers'  Index  (PMI)  readings  for  manufacturing  and  services,  record  festive season  automobile  sales,  robust  UPI  transactions,  and  increased  tractor  sales,  indicate  a the implementation of GST reforms. Furthermore, as per the NABARD Rural Economic Conditions and  Sentiments  Survey  (November  2025),  79.2%  of  rural  households  reported  increased consumption expenditure in the last one  year, the highest among all bi-monthly rounds in FY

strengthening economic momentum during September-December 2025, following 2025-26 so far.

(d) & (e) GST rates and exemptions are prescribed based on the recommendations of the GST Council,  which  is  a  constitutional  body  comprising  of  representatives  of  the  Centre  and  the States.

All  States  have  enacted  their  Fiscal  Responsibility  and  Budget  Management  (FRBM)  Act. Compliance to the State FRBM Act is monitored by the respective State Legislatures. Central Government  usually  considers  the  fiscal  limits  as  per  the  accepted  recommendations  of  the Finance  Commission  while  exercising  powers  to  approve  borrowings  by  States  under  Article 293(3) of the Constitution of India.

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