NEW DELHI, Sept. 9 -- India's planned revamp of its goods and services tax (GST) will boost household consumption and support growth, but weigh on government finances, Moody's Investors Service said Tuesday.

Approved at a 3 September GST Council meeting and effective 22 September, the new structure consolidates most rates into two slabs-5% and 18%-with goods from the old 12% and 28% categories moving lower. A new 40% rate will apply to "sin" and luxury items such as premium cars, tobacco, sugary drinks, casinos and online gaming. Food staples, medicines and insurance will be exempt.

Moody's said the lower effective tax rates will cut prices, bolster household demand and support growth at a time when India faces external pressures from h...