India Eyes Bold GST Cuts Amid U.S. Tariff Pressures

In a strategic move to bolster domestic demand, Indian state and federal ministers are set to discuss major cuts in the Goods and Services Tax (GST) over a two-day meeting starting Wednesday. This initiative is aimed at counterbalancing the economic impacts of U.S. tariffs.

With recent personal tax reductions and economic growth surpassing expectations at 7.8%, the proposed GST cut is expected to further spur consumption in India. Finance Minister Nirmala Sitharaman will lead a panel reviewing potential tax reductions on over 400 items, ranging from daily essentials to small cars.

The discussion will explore moving from a four-rate structure to two primary rates of 5% and 18%, while maintaining higher taxes for luxury and 'sin' goods. The goal is to mitigate revenue losses, expected to reach $21 billion, while encouraging local purchasing power and addressing state concerns over financial shortfalls.

(With inputs from agencies.)