GST Council reduces tax rates on more than 50 items

Andrew Cummings
July 21, 2018

NEW DELHI:Chaired by Interim Finance Minister Piyush Goyal, the Goods and Services Tax (GST) Council will meet on Saturday for the 28th time to discuss some crucial changes in the new indirect tax regime, including simplified tax return, lowering tax slabs on about 30 odd items and to consider cess on sugar.

"Rakhis have been exempted from GST, tax on ethanol has been cut to 5 per cent, small handicrafts have been exempted", Goyal said.

The GST Council in its 28th meeting reduced rates for a host of consumer centric items like perfumes, cosmetics, refrigerators, washing machines, and small screen TVs, apart from accepting the demand for exempting sanitary napkins. Also, rakhis, sal leaves, the raw materials used to make regular brooms have also been fully exempted from being charged under GST.

The GST rate on bamboo flooring, hand-operated rubber rollers and zip fasteners have been cut to 12 percent from 18 percent, while the GST rate on ethanol has been to cut 5 percent from 18 percent, a move aimed at encouraging higher ethanol blending in petrol and diesel.

In a relief for the common man, the GST Council on Saturday reduced tax rates on over 50 items including refrigerators, washing machines and small televisions, which would now be taxed at 18 percent, down from the current 28 percent.

The Council also gave a major relief to the hotel industry by providing that tax rate shall be based on transaction value instead of declared tariff. As a green initiative, GST on supply of e-books has been reduced from 18 to 5 per cent. The items which could be considered for cutting of tax rates might include sanitary napkins, handicrafts and handloom goods.

They are now taxed at 28 per cent.

Asked about the revenue impact of the tax rate cut, Goyal said it will only be "nominal".

So far, businesses with turnover of up to Rs 1.5 crore were permitted to file returns quarterly. The council has cleared 46 amendments, which will be passed in Parliament, Goyal added. Two new simpler return formats have also been approved.

The controversial reverse charge mechanism (RCM) has also been deferred until September 2019. He will not have to file any more returns. Keeping this in mind, GST Council in October, 2017 had temporarily suspended RCM, as it was increasing compliance burden on taxpayers.

This will reduce harassment of transporters, he said.

Other reports by iNewsToday