About 60 goods and services are likely to get cheaper, with Finance Minister Arun Jaitley expected to push for big tax rate cuts in the GST Council meeting on Friday as part of a broader strategy to help the economy claw out of a three-year growth slump.

Prime Minister Narendra Modi brainstormed for over three hours with Jaitley and BJP president Amit Shah on Thursday, taking stock of the current state of the Indian economy that is smarting under an untidy goods and services tax (GST) rollout and the lingering effects of demonetisation.

According to an official, who did not wish to be identified, the Centre is going to propose GST rate cuts in many items that fall in the highest tax bracket of 28 percent.

Besides, the GST rates on several goods and services may be cut from 18 to 12 percent.

“A decision towards this is yet to be taken as it would require Council's approval,” the official said.

The rate cuts, if announced on Friday, will help boost household spending just in time for the pre-Diwali buying season.

GST has a four broad slab structure – 5, 12, 18 and 28 percent – along with a cess on luxury and demerit goods such as tobacco, pan masala and aerated drinks.

The states would receive provisional compensation from Centre for loss of revenue due to abolition of taxes such as VAT (value added tax), octroi and implementation of new tax system.

The compensation would be met through levy of a 'GST Compensation Cess' on luxury items and sin goods like tobacco, for the first five years.

The government also plans to introduce slew of measures to reduce compliance burden for small taxpayers struggling under the country's new indirect tax system, GST that was rolled out from July 1.

The Council may consider relaxing return filing timeline for small and medium enterprises (SMEs), defer reverse charge mechanism, and reopen registration for composition scheme for the third time to March 31, 2018 and hasten tax refunds for exporters battling cash crunch.

The Reserve Bank of India (RBI), which on Wednesday kept its key lending rate—the repo rate—unchanged at 6 percent, acknowledged that the disruptions from goods and services tax (GST) have worsened the broader economy’s prospects in the short term.

The RBI also sharply revised the economy’s growth forecasts for 2017-18. The central bank now expects the gross value added (GVA) to grow at 6.7 percent in 2017-18 from 7.3 percent projected earlier.

India’s real or inflation-adjusted gross domestic product grew 5.7 percent in April-June, the slowest in 13 quarters.

“The implementation of the GST so far also appears to have had an adverse impact, rendering prospects for the manufacturing sector uncertain in the short term,” RBI governor Urjit Patel said on Wednesday.

This may further delay the revival of investment activity, which is already hampered by stressed balance sheets of banks and corporates.

The RBI has placed the onus firmly on the government to engineer a quick turnaround in the economy that was still smarting under an imperfect GST roll out, marred by complaints about technical glitches on the tech backbone and procedural hassles.

Delayed GST tax refunds have also resulted in severe fund shortage for exporters. This has hurt their working capital availability, affecting normal operations.

Exporters fear funds worth Rs 65,000 crore could get locked up in GST input tax credits if rules are not eased by December. A panel headed by Revenue Secretary Hasmukh Adhia is looking into the matter and suggest solutions to the Council on Friday.

GST, billed as India’s most ambitious reform move, has consolidated a patchwork of 17 local and central duties into a single levy, stitching together a common national market, and enabling way for a more robust economy.

Among various challenges, small and medium businesses have been particularly hit due to higher compliance burden owing to complex monthly return filing and glitches in the information technology (IT) portal GST Network (GSTN).

"There could be a change in return filing cycle for small tax payers. A quarterly return filing could be implemented for small businesses," a senior government official told Moneycontrol.

However, what could be a business' annual turnover cut off for it to be called a small taxpayer, will be decided by the Council on Friday, the official said.

Currently, regular businesses have to file three monthly returns, in addition to one annual return.

A total of 68.2 lakh taxpayers were required to file returns for the month of August, out of which, 37.63 lakh assessees filed returns, as on September 25, which was surprisingly lesser than the 38.38 lakh returns have been filed in July, the first month of the indirect tax reform. The low level of compliance has been a matter of concern for the government and keep this in mind, the Council could make key changes to provide some relief to small businesses grappling with the several changes under the new system.

The Council may reopen registration for composition scheme for the third time. The scheme is an alternate method of taxation, which allows small businesses with annual turnover up to Rs 75 lakhs, to pay tax at a concessional rate, as well as reduce the compliance cost. The enrollment into the plan is however, optional.

“If the Council approves, registration for the composition scheme will be open till March 31, 2018. The annual turnover for businesses opting for the scheme may be increased up to Rs 1 crore,” another official said.

Under the scheme, traders, manufacturers and restaurants can pay tax at 1, 2 and 5 percent, respectively. Compliance burden for taxpayer would reduce as they will have to file returns only once in a quarter as against monthly returns that needs to be filed by other normal taxpayers. However, dealers cannot avail input tax credit, unlike a normal taxpayer.

Initially, the response for the composition scheme was lukewarm, with only 10.24 lakh dealers opting for it over a span of one and half months, starting July 1. Last month, the Council decided to reopen registration for the scheme from September 17.

This time, however, more than 5 lakh dealers opted for the scheme over just 13 days, making to the total number of assessess 15.43 lakh.

In addition, the Council may also defer the reverse charge mechanism (RCM), that has been especially bothering the small tax payers, the first official said.

Reverse charge is a mechanism where the recipient of the good or service will have to pay GST, which is otherwise paid by the supplier. The charge is applicable on a registered dealer, if he buys goods from a dealer not registered under GST. However, the receiver of the good is eligible for input tax credit, while the unregistered dealer is not.

“Businesses are getting affected by RCM. Registered taxpayers are not willing to take the burden of paying tax, while small or unregistered taxpayers are running out of business if registered dealers are not buying goods from them,” the official said.

“There could be a decision towards deferring RCM for at least some time,” the official said.