GST Council may take stock of one-year rate rationalisation; broad-based cuts unlikely in October meeting

The 57th Goods and Services Tax (GST) Council meeting is likely to take stock of the impact of last year’s sweeping rate rationalisation before considering any fresh broad-based reduction in GST rates, people familiar with the matter said. The meeting, originally scheduled for September 12, has now been rescheduled to October 7 in New Delhi, with preparatory meetings of tax officials on October 5 and 6. The formal agenda is yet to be finalised. 

The Council is expected to review how the revised tax structure has affected revenues, consumption and the finances of states nearly a year after the changes came into effect on September 22, 2025. The 56th Council meeting had replaced the earlier four-rate structure of 5%, 12%, 18% and 28% with a simplified 5% and 18% structure, alongside a 40% special rate for select sin and luxury goods.

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The revenue data so far suggest that the rationalisation has not resulted in a sustained collapse in GST collections. Gross GST collections stood at ₹1.96 lakh crore in October 2025, the first full month after the new rates took effect, up 4.6% year-on-year. Collections subsequently rose to ₹1.75 lakh crore in December, ₹1.93 lakh crore in January and ₹1.84 lakh crore in February. March collections crossed the ₹2 lakh crore mark, while full-year FY26 gross GST revenue reached ₹22.27 lakh crore, an 8.3% increase over FY25.

The momentum has strengthened in the current financial year. Gross GST revenue rose 15.4% year-on-year to a record ₹2.11 lakh crore in July and another 14.8% to ₹1.998 lakh crore in August. Cumulatively, April-August gross GST collections stood at ₹10.43 lakh crore, up 11% from a year earlier. However, the composition is noteworthy: August domestic GST revenue grew 9.3%, while GST from imports jumped 29%. 

Against this backdrop, sources said the Council may prefer to consolidate the gains from the 2025 exercise rather than undertake another large-scale rate cut immediately, particularly as states seek clarity on the revenue impact of the overhaul and the economy faces uncertainty from geopolitical developments, including the West Asia crisis.

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Some product-specific proposals could nevertheless come up. The Council may examine the 18% GST rate on mobile phones amid weakening handset demand. The issue is not part of a confirmed agenda yet. 

The Council could also consider outstanding issues around input tax credit, registration, refunds, compliance and dispute resolution. Any discussion on further customs-related rationalisation is also likely to be closely watched by industry.

The broad policy focus, however, is expected to be on assessing whether last year’s rate cuts have actually translated into lower consumer prices and stronger demand, before undertaking another major round of rate changes.