New Delhi, Sep 4 : In a major step towards tax simplification and economic revival, the GST Council has scrapped the 12% and 28% tax slabs, retaining only the 5% and 18% rates. This bold structural reform is expected to enhance consumer confidence and give a solid push to domestic consumption. According to a report by Motilal Oswal Financial Services, this is the government’s first significant economic reform in its current term, aiming not only at tax rationalization but also at reviving economic momentum amid global uncertainties. The simplified tax regime is expected to serve as a foundation for a more resilient and self-reliant economy. The cascading effect of these reforms will likely be felt across several critical sectors, including Automobiles, Consumer Durables, Cement, Retail, Hospitality, Insurance, Oil & Gas, and Renewables. The report highlights that domestic-focused companies and stocks are poised to benefit, as the GST rationalization improves affordability, demand, and ease of doing business. For the equity markets, this policy shift could signal the beginning of a positive trajectory, driven by enhanced corporate performance and consumer sentiment. One of the most significant impacts of the new GST structure is the resolution of the inverted duty structure affecting industries like textiles and fertilizers. The simplification of Input Tax Credit (ITC) procedures is also a major win, especially for MSMEs. Faster release of blocked tax credits will ease liquidity constraints and encourage investments, innovation, and employment generation. This move is expected to reduce compliance burden and unlock the true potential of India’s small and medium business ecosystem. Beyond tax reform, this restructuring is being positioned as a ‘growth reform’, with broader implications for national economic development. As Prime Minister Narendra Modi signaled, more reforms are on the horizon across various sectors to stimulate long-term growth. These GST changes not only simplify taxation but also reinforce India’s commitment to improving the ease of doing business, boosting investor confidence, and making the economy more future-ready.
