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The central government is likely to face a revenue loss of about Rs 3700 crore in FY26 from the recent GST rate cuts as stronger growth and higher consumption have significantly cushioned the impact according to a report by the State Bank of India (SBI). Based on FY24 estimates the government had projected a gross revenue loss of Rs 93000 crore from the GST reductions. However after factoring in additional revenue collections the net loss was brought down to Rs 48000 crore the report noted. How Much Loss Govt Can Incur In FY26? For FY26 SBI estimates the gross revenue loss to be higher at Rs 1.11 lakh crore. But with strong consumption trends and higher tax revenue the net loss is projected to decline sharply to Rs 25794 crore for the full FY26 including centre and states share. For a six-month period the Centres share of loss is significantly smaller. As per FY24 baseline it stood at Rs 6960 crore while in FY26 it is expected to reduce further to Rs 3740 crore. It stated based on the trend growth and consumption boost we expect Rs 3700 crore revenue loss in GST On an annualized basis the government estimates the net fiscal impact of GST rationalisation at around Rs 48000 crore. However SBIs calculations based on trend growth and consumption boost point to a much smaller revenue loss of Rs 3700 crore which is just about 1 basis point impact on the fiscal deficit. The report also pointed out that in the past GST rate cuts have led to additional revenues of nearly Rs 1 trillion. Also Read: Good news for Indians! flat maintenance term insurance hotels… what will get cheaper after GST reforms and what will be expensive? How GST 2.0 Will Impact On Inflation? It emphasized that rationalisation of tax rates should not be seen as a temporary stimulus to demand but rather as a structural reform. The simplified framework is expected to reduce compliance burdens encourage voluntary compliance and widen the tax base in the long run. On the inflation front the report mentioned that the reduction in GST rates on essential items around 295 in total has brought down rates from 12 per cent to 5 per cent or NIL. This is expected to reduce CPI inflation in this category by 25-30 basis points in FY26 considering a 60 per cent pass-through effect on food items. Highlights GST reforms by Modi Govt Modi goct GST reforms 2.0 effective 22nd September Revenue loss to govt after GST reforms How revenue govt to lose after GST 2.0 implementation Additionally the rationalisation of GST rates on services is estimated to lower CPI inflation by another 40-45 basis points with a 50 per cent pass-through effect on other goods and services. (With Inputs From ANI)