'Ek teer kai nishaan!': From combating Trump’s tariffs to inflation — why Kotak AMC's Nilesh Shah says GST 2.0 hits many targets

Kotak Mutual Fund Managing Director Nilesh Shah on Thursday described the government’s latest GST overhaul as "ek teer kai nishaan", single reform addressing multiple challenges from tariffs to inflation, while boosting India’s growth outlook.

In a detailed post on X, Shah hailed the consolidation of slabs and rationalisation of rates under GST 2.0, calling it a reform with wide-ranging impact. “GST slab consolidation and rate rationalization is ‘ek teer kai nishaan’,” he said, listing out its benefits: lowering inflation, increasing growth, improving ease of doing business, boosting consumer sentiment, and ensuring the fiscal path remains undisturbed.

According to him, the reform will also help India absorb the shock of “unfair US tariffs.” He noted that rationalisation “will partially help offset the adverse impact of US tariff in the quarters to come with increased consumption.”


Shah also underlined the urgency behind the Council’s push, pointing out that “completing two days GST council meeting in one day does show the urgency.”


At the same time, he stressed the need for vigilance against misuse. “While the leakages and fraud of GST needs to be dealt with iron hand, process improvement should be a continuous affair with feedback loop,” he wrote.

On fiscal management, Shah called the Diwali benefit of nearly ₹48,000 crore “fiscally manageable at ~7 bps.” But he flagged another area of concern: speculative trends in the financial markets. “Savings misallocation happening through F&O speculation and double your money ponzi schemes making Indians quick money addicts costs more than four-five times the GST gift,” he cautioned.

GST Council’s ‘Next-Generation’ reforms

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, has approved a sweeping rationalisation of the tax system, moving from a four-tier structure to a simplified two-rate regime: a standard rate of 18 per cent and a merit rate of 5 per cent, along with a special de-merit rate of 40 per cent on select goods and services. The reforms take effect from September 22.

Sitharaman called it a “next-generation GST reform” that aims not only to rationalise rates but also to address structural issues and improve compliance. “Let me first say that the honourable PM actually set the tone for the next generation in reforms on the 15th of August when he spoke from the Red Fort. He desired that we give benefits to the people at the earliest. This reform is not just on rationalizing rates. It's also on structural reforms. It's also on ease of living, so that businesses can do their business with GST with great ease,” she said.

The minister said inverted duty structures and classification issues had been corrected to ensure predictability and stability. At the household level, several essential items — from shampoos, soaps and bicycles to UHT milk, paneer and Indian breads — have seen sharp cuts, with many daily-use goods moving to the 5 per cent or nil category.

High-ticket items such as small cars, motorcycles under 350cc, air conditioners and televisions up to 32 inches will now attract 18 per cent instead of 28 per cent. Cement too has been brought down to 18 per cent from the earlier 28 per cent. In the social sector, 33 life-saving drugs including cancer medicines have been exempted entirely.

Luxury and sin goods — including personal aircraft, motorcycles above 350cc, pan masala, cigarettes, gutka and sugary drinks — will be taxed at 40 per cent, now calculated on retail prices rather than factory prices.

Sitharaman stressed that the reform was designed to bring direct relief to households while making the system simpler for businesses.

“Reforms have been carried out with the focus on the common man. Every tax levied on the common man's daily-use items has gone through rigorous scrutiny, and in most cases, the rates have come down drastically. There is a complete reduction for common man and middle-class items,” she said.