India Maintains Fiscal Deficit at 4.4% Despite GST Rate Cut

India maintained its FY 2025–26 fiscal deficit target at 4.4% of GDP, despite potential revenue losses from recent Goods and Services Tax (GST) rate reductions, a senior finance ministry official told The Economic Times on Thursday. Separately, Sanjay Kumar Agarwal, Chief of the Central Board of Indirect Taxes and Customs, said GST collections may see a temporary dip in the initial months, but festive-season demand is expected to boost sales. Agarwal expressed confidence that the new GST rates and tax computation system—set to take effect from September 22—will be implemented smoothly and without disruption. Under the new system, the earlier four GST slabs have been consolidated into two principal rates: 5% and 18%, along with a new 40% slab for high-end and “sin” goods such as cigarettes, pan masala, gutkha, and aerated beverages. Additional levies above 40% have been abolished, reducing the effective tax burden on mid-sized and large vehicles.