| ABSTRACT |
The introduction of GST 2.0 marks a major restructuring of India’s indirect taxation system, replacing the earlier four-slab framework with a simplified two-rate model and an additional demerit rate for luxury and sin goods. This study examines the economic implications of slab rationalisation on prices, revenue, and consumption. The primary aim is to assess whether the reform can stimulate consumption, enhance compliance, and strengthen tax buoyancy in the medium term. Using qualitative analysis of secondary sources, including government notifications, financial reports, and sectoral studies, the paper evaluates the potential effects on key sectors such as fast-moving consumer goods (FMCG), automobiles, healthcare, and construction. Findings suggest that essential and mass-consumption goods benefit from reduced tax incidence, likely increasing affordability and demand, particularly in rural and middle-class households. Discretionary items, including automobiles and consumer durables, also show price reductions that may spur higher sales volumes. From a fiscal perspective, the reform is projected to cause short-term revenue losses. However, dynamic estimates indicate that higher compliance, tax buoyancy, and a broader formalisation of economic activity could offset these losses over time. The study concludes that GST 2.0 has the potential to serve as both a demand-side stimulus and a structural reform, though its effectiveness will depend on corporate pricing strategies and consumer response. |
| AUTHOR |
Sachin Kurade, Bibi Saleema Badagi, Sureshgouda, Anant Hanumanta Pujari, Anand Mallikarjun
Research Scholar, Department of Studies in Economics, Karnatak University, Dharwad. Karnataka State, India
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