Gujarat And Many Other States May Be Hit With GST Rate Cut But Consumers Gain Power

The upcoming festive season could witness a huge bonanza as the cut in tax rates would make most goods cheaper.

This will also boost the purchasing power for citizens.

Production is also expected to rise. The worry is for the short term. The changes in GST rates will affect the state government’s projection of an average 11per cent revenue growth in the 2025–26.

A senior official of the state Finance Department said that strategically reducing rates during Navratri and Diwali will increase people’s purchasing power, which in turn will boost the economy.

“We expect the government to manage this shortfall in the long run,” he said, without giving specific loss figures. He further remarked that the GST rate cuts should not be compared purely in terms of financial profit and loss, but rather in terms of public welfare and economic benefits.

The decision on rates taken by the 56th GST Council will be implemented from September 22. Earlier Prime Minister Narendra Modi, delivering his Independence Day speech said that GST rates will not only be reduced but the structure further simplified.

The GST Council chaired by Finance Minister Nirmala Sitharaman has abolished the 12 per cent and 28 per cent tax slabs while introducing two new rates of 5 per cent and 18 per cent.

This translates to an overall reduction of 15–17 per cent, which will benefit Gujarat’s traders, manufacturers, and consumers.

Following the Union Finance Ministry’s order, the Gujarat government has issued an ordinance regarding GST rate revisions, and amendments will be passed in the next year’s budget session.

According to official data from the Finance Department, Gujarat collected Rs 73,281 crore under SGST in 2024–25, compared to Rs 64,133 crore in 2023–24, reflecting a 13 per cent increase. Gujarat ranks among the top five states in GST collection. Maharashtra, Karnataka, and Tamil Nadu are the highest GST-collecting states.

Gujarat CM Happy With The Announcements

Welcoming the GST rate cut, Chief Minister Bhupendra Patel said, “This reform will benefit crores of middle-class families, farmers, small traders, and entrepreneurs.” He added that after the Prime Minister announced on August 15 the promise of reducing GST rates to accelerate the economy, swift implementation has been ensured. “These reforms will give new strength to India’s and Gujarat’s economy.”

State Finance Minister Kanubhai Desai stated, “It is important that people benefit, even if government revenue growth slows down. The living standards and social security of common citizens will improve.” Speaking on the renewable energy sector, he said that tax on equipment and parts for solar, wind, and tidal energy has been reduced from 12 per cent to 5 per cent, which will benefit micro and small industries by encouraging consumption and production.

According to official documents of the Finance Department at the end of July 2025, the state government had set a target of Rs 80,520 crore for SGST revenue, of which Rs 22,734.45 crore had been achieved by July. However, with GST rate cuts, a short-term downfall is expected. The government estimates annual losses of over Rs 5,000–7,000 crore. Importantly, out of total budgeted revenue receipts of Rs 2,51,553.07 crore, the government had achieved Rs 73,914.12 crore by July.