Traders and shoppers walk through the Bara Bazar market (Photographer: Sanjit Das/Bloomberg)

GST To Have Minimal Impact On Inflation, Nomura Says

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  • The implementation of the Goods and Services Tax (GST) is likely to be fiscally neutral and its impact on inflation is expected to be less than 20 basis points, says a Nomura report.

    According to the Japanese financial services major, the GST Council is making steady progress and is expected to be implemented in the July-September quarter this year.

    Though the impact of GST is likely to be minimal, growth numbers are expected to get affected in the run-up to its implementation.

    In the near term, we expect the GST to be fiscally neutral, the resulting inflation impact to be minimal at less than 20 basis points and the impact on growth to be marginally negative in the run up to its implementation.
    Nomura Report

    "Over time, we expect the elimination of cascading taxes and its simplified tax structure to boost productivity, lower costs, aid in the formalisation of the economy and result in large revenue benefits for the government," it added.

    The GST Council has formally approved all five bills related to the implementation of the GST: Central GST (CGST), State GST (SGST), Integrated GST (IGST), Union Territories GST (UTGST) and compensation.

    Four of the five bills – CGST, IGST, UTGST and the compensation – have received Cabinet approval and are set to be introduced in the lower house of parliament in the ongoing Budget session, which ends on April 12.

    The SGST Bill will be taken up by the respective state government through its Cabinet and then to the respective state assemblies for passage.

    Also Read: GST Council Approves All Five Draft Bills, Moving Closer To July 1 Rollout