Business Finance

Moody’s Sees Higher GST Revenue Loss Than Govt

Rating agency Moody’s said India’s recent GST rate cuts are expected to encourage household spending and strengthen demand. The reforms introduced a two-slab structure of 5% and 18%, along with a 40% tax on luxury and sin goods.

Revenue Shortfall Could Exceed Estimates

The Indian government projected a revenue loss of about ₹48,000 crore due to the changes. Moody’s, however, warned that the actual shortfall could be higher, especially in fiscal 2027, when the revised structure will apply for a full year.

Fiscal Strain Despite Growth Potential

Moody’s cautioned that even as consumption rises, reduced tax inflows could strain fiscal consolidation and debt reduction plans. Interest payments already consume about 23% of government revenue—one of the highest ratios among investment-grade sovereigns—raising concerns over fiscal stability.

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