India’s proposed Goods and Services Tax (GST) reforms could help soften the blow of steep US tariffs and give a lift to household spending, BMI, a Fitch Solutions company, said on Thursday.The government is planning to lower tax rates on items commonly used by the public, a move that BMI believes will boost consumption and partly offset the impact of 50% tariffs imposed by the US.“The GST reform could cancel out the drag on growth from the tariffs. Given that the details have yet to be confirmed, we highlight the GST reform as a slight upside risk to our growth forecast for now,” BMI said.The firm has, however, trimmed its GDP growth outlook, lowering forecasts to 5.8% for FY2025-26 and 5.4% for FY2026-27.Since its launch, GST has become the country’s second-largest source of fiscal revenue after income tax, accounting for around 30% of total revenue and 2.5% of GDP in FY2024-25. Despite this, BMI noted that the fiscal impact of the planned reform is likely to be mild.At present, goods and services fall under a four-tier GST structure, with rates ranging from 5% to 28%. The Centre’s proposal seeks to simplify this system by taxing most goods at either 5% or 18%. Household durables such as washing machines, air conditioners and refrigerators are expected to fall into the lower bracket under the new structure.The GST Council, chaired by the Union finance minister and made up of ministers from all states and Union Territories UTs, will meet on September 3 and 4 to discuss the reform.