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Revenue buoyancy driven by spurt in consumption to take care of GST shortfall: FM
Sep-08-2025

Few days after announcement of GST Reforms, Finance Minister Nirmala Sitharaman has expressed confidence that revenue buoyancy driven by spurt in consumption will take care of the estimated GST shortfall of Rs 48,000 crore following reduction in tax rates on a host of items, and hence there will be no impact on public finances but definitely bolster GDP growth.

She also emphasised that consumption boost to be provided by landmark GST reform and better-than-expected first quarter GDP growth number may help in exceeding the projected pace of 6.3-6.8 per cent for FY26. Sitharaman said ‘I think the consumption spurt from September 22 will increase income buoyancy. To a large extent, this Rs 48,000 crore amount we will be able to make it up this year itself. So I don't see an impact on my fiscal deficit or my fiscal management. I will stick to my numbers (of 4.4 per cent of GDP)’. 

Meanwhile, recently the all-powerful GST Council headed by Sitharaman approved a two-tier structure of 5 per cent and 18 per cent taxes, as well as a 40 per cent slab. Nearly 400 products - from soaps to cars, shampoos to tractors and air conditioners - will cost less when the rejig of the GST is effective from the first day of Navaratri on September 22. Premiums paid on individual health and life insurance will be tax-free.

Calling the landmark GST overhaul a 'people's reform', Sitharaman said that rationalisation of rates for a wide swath of products will benefit every family. She also noted that this is a reform which touches the lives of all 140 crore people. There is no individual in this country who is untouched by GST. The poorest of the poor also have something small that they buy, touched by GST.


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