Govt to monitor GST rate cuts to ensure relief reaches common man: Minister

The finance ministry, in coordination with other ministries, will closely monitor the implementation of the reduced goods and services tax (GST) rates to ensure that the relief is passed on to the common man, minister of state for finance Pankaj Chaudhary said on Thursday.

"The government is serious about the benefits (of rate cuts) reaching the common man, and we will work with relevant ministries and keep an eye on it," Chaudhary told ET in an interview. The government will run a campaign for this purpose, he added.

Chaudhary expects the GST benefits, on top of the income-tax breather announced in the 2025-26 Budget, to give a decisive push to consumption by leaving more money in the hands of the people.


"While the income-tax relief would benefit the middle class the most, the latest GST relief will benefit a larger spectrum of society-the poor and the middle class -and micro, small and medium enterprises and others," Chaudhary said.

The relief, announced by the GST Council late Wednesday, came days after Prime Minister Narendra Modi's Independence Day speech, pledging next-generation reforms, including GST 2.0.

The move comes at a time when the government is looking to counter the impact of persistent global headwinds-especially a 50% additional tariff imposed by the US on most Indian goods-by pulling all domestic growth levers.

India's gross domestic product grew at a higher-than-expected 7.8% in the June quarter, further cementing the country's position as the world's fastest-growing major economy. For the full fiscal year, the finance ministry has retained its growth projection of 6.3-6.8% for the country.

Compensation Cess
Chaudhary, who was heading the Group of Ministers (GoM) on compensation cess, said the cess may continue on tobacco products beyond the October 31 deadline, depending on how soon the interest on loans taken by states will be repaid.

The GST Council decided to retain the compensation cess and a 28% indirect tax rate levied on sin goods such as tobacco products for now.

Chaudhary said the exact timeline for discontinuing the compensation cess on tobacco products will be decided by the chairperson of the GST Council-the union finance minister.

He, however, clarified that the Centre is yet to decide on the levy that would replace the compensation cess to maintain the overall taxation on tobacco products.

"This will be decided closer to the deadline but so far taxation under GST is concerned it is done now," the minister said.

Currently, tobacco and such products attract the highest GST rate of 28% along with compensation cess, central excise duty, and national calamity contingent duty, taking the total indirect tax incidence to 53%.

Average annual GST collection from tobacco products in the past five years totalled ₹51,000 crore, along with additional education cess and surcharges from tobacco manufacturers totalling ₹27,660 crore.