India slashes consumption tax: reactions from industy

(Reuters) -India late on Wednesday announced tax cuts on hundreds of consumer items ranging from soaps to small cars to spur domestic demand and simplified its complicated goods and services tax structure to two rates from four.

Here is how the industry is reacting so far:

ANISH SHAH, GROUP CEO & MD, MAHINDRA GROUP

"The next-generation GST reforms...mark a defining moment in India's journey towards building a simpler, fairer, and more inclusive tax system.

At Mahindra, we view these reforms as transformative. They simplify compliance, expand affordability, and energise consumption, while enabling industry to invest with greater confidence."

SAURABH AGARWAL, PARTNER & AUTOMOTIVE TAX LEADER, EY INDIA

"The rationalization of GST rates on automotive vehicles and parts is a truly welcome and significant development. By making vehicles more affordable across all segments, this move will not only boost consumer spending but also simplify complex classification disputes that have long burdened the industry.

While this change is broadly positive, the automotive industry must now carefully reassess the financial impact of state incentives and subsidies, which are often linked to GST rates. This may necessitate a renegotiation with state governments to address potential changes in costs and clawback periods."

SAMIR SHAH, EXECUTIVE DIRECTOR & CFO, HDFC ERGO GENERAL INSURANCE COMPANY

"The GST Council decision to exempt individual health insurance from GST is a welcome development. This move aligns perfectly with the broader ambition of the regulator of 'Insurance for All by 2047,' providing a tangible step forward in that direction.

We are closely analysing the implications concerning the input tax credit. While it is anticipated that there will be lowering of the premiums due to lowering of the taxes, we are yet to understand the extent of this reduction as this will also depend upon availability of the input tax credit, which will become clearer over the coming days.”

NILESH SHAH, MANAGING DIRECTOR, KOTAK MAHINDRA ASSET MANAGEMENT CO

"The GST slab and rate rationalisation as well as the process improvement is a step in the right direction. While the leakages and fraud of GST needs to be dealt with an iron hand, process improvement should be a continuous affair with feedback loop.

The GST announcement lowers inflation, increases growth, boosts consumer sentiment, doesn't disturb the path of fiscal consolidation, improves ease of doing business and partially offers adverse effects of tariffs."

(Reporting by Chandini Monnappa in Bengaluru; Editing by Mrigank Dhaniwala)