Economic Survey 2026: Two-Rate GST Structure May Boost Consumption and Manufacturing

The Economic Survey tabled by Finance MinisterNirmala Sitharaman has indicated that moving towards a two-rate GST structure could help boost consumption and strengthen the manufacturing sector. The Survey states that simplifying the GST framework would make compliance easier and support demand.

As per the Survey, the proposed structure under GST 2.0 includes a Standard Rate of 18% and a Merit Rate of 5%, along with a higher rate for de-merit and sin goods at 40%. The Survey explains that reducing the number of tax slabs can help with confusion in the current multi-rate system.

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The Economic Survey notes that a two-rate GST structure could improve manufacturing competitiveness by reducing tax inefficiencies. By addressing issues such as inverted duty structures and blocked input tax credit, manufacturers will experience smoother cash flows and lower compliance burden.

The Survey further highlights that simplified GST rules will encourage small businesses to formalise, which will in turn enhance the tax base without increasing tax rates. According to the Survey, these changes could support higher consumption, boost manufacturing activity, and contribute to sustained economic growth.

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