New Delhi, Sept. 5 -- The tax revenue foregone due to GST rate cuts will eventually push India's fiscal deficit above the government's target of 4.4 per cent of GDP in FY26, unless the gap is absorbed by slowing down capital expenditure intensity, according to a report by JM Financial.

The report highlighted that markets had already tilted towards consumption-driven sectors after the Goods and Services Tax (GST) Council announced a rate rationalisation on August 15. However, it cautioned that a shift away from capex-oriented sectors cannot be ruled out in the coming quarters.

Certain categories face higher taxes. Coal, which earlier attracted 5 per cent GST, now falls under the 18 per cent bracket. Apparel costing more than Rs 2,500 and...