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flag India's 2025 GST cut to 5% on most food and beverages boosts affordability and food processing, with trade-offs in government revenue.

flag India’s 2025 GST overhaul, announced by PM Modi, slashed taxes on most food and beverages to a 5% rate, effective September 22, boosting affordability and consumption. flag The reform, called a "Diwali bonus," aims to stimulate the underdeveloped food processing sector, where only a small share of produce is processed, leading to high post-harvest losses. flag Major FMCG brands cut prices, signaling early benefits. flag The move supports rural and urban households, where food spending is significant, and encourages formalization and investment. flag However, it may reduce government GST revenue by Rs 48,000 crore, with a net loss of Rs 3,700 crore, potentially affecting public spending. flag Despite calls, unhealthy foods were not taxed higher.

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