Insulin, cashews, pickles to get cheaper: GST Council reduces rates of 66 products
With two weeks to go for the goods and services tax (GST) roll-out, the GST Council on Sunday reduced the rates for 66 items and expanded the scope of the composition scheme for the benefit of small traders, manufacturers, and restaurateurs. The composition scheme is a presumptive taxation scheme allowing small traders, manufacturers and restaurants to pay a 1-5 per cent GST rate on sales without tax credits.
Insulin, pickles, printers, agarbattis, school bags, and cashew nuts are among the 66. Those were among 133 items whose rates were reviewed following industry representation. However, the GST rates for telecom services, marbles, granite, spectacles, among others, were retained, which drew flak from the respective sectors.
Union Finance Minister Arun Jaitley, who is the head of the Council, said in certain cases the rate fitment committee went beyond the equalisation principle of maintaining the current tax incidence.
“There are certain items that were historically taxed at a higher rate, but the Council felt that the burden needed to be reduced,” said Jaitley. The finance minister said the average of all the rates decided by the Council was significantly lower than the present tax incidence.
On the question about any further revision of rates, he said the fitment committee and the GST Council had gone into all the cases in depth and the rates had been decided after discussion.
“These broadly are the final rates… Just because somebody raising an issue does not mean you have to grant it,” he said.
On the automakers’ pitch for a lower rate for hybrid cars, Jaitley said the facts presented by the industry were not correct. “If necessary, it will come up for discussion,” Jaitley said.
The current level of tax on hybrid cars stands at 30.3 per cent, as against 43 per cent (28 per cent plus 15 per cent cess) decided by the Council.
Providing relief to small entities under the GST, the composition scheme has now been expanded to traders, manufacturers, and restaurants with an annual turnover of Rs 75 lakh as against Rs 50 lakh decided earlier.
The scheme allows traders, manufacturers, and restaurants who satisfy the turnover criterion to pay a fixed rate at 1 per cent, 2 per cent, and 5 per cent, respectively, and they will have reduced procedural requirements.
All goods and services under the GST regime have been broadly placed in five tax slabs — 0, 5, 12, 18, and 28 per cent.
The GST on insulin, cashew nuts and agarbattis has been lowered to 5 per cent from 12 per cent proposed earlier. The rate for school bags, printers, and tractors will attract an 18 per cent rate against 28 per cent decided in the earlier meeting. The rate for children’s exercise books has been slashed to nil from 12 per cent proposed earlier.
The GST rate for movie tickets under Rs 100 has been slashed to 18 per cent, while tickets priced above Rs 100 will be taxed at 28 per cent. Kitchen use items like pickles, mustard sauce, and morabba will attract 12 per cent as against 18 per cent proposed earlier.
MS Mani of Deloitte Haskins and Sells said the reduction indicated many consumer items might see a price reduction or at least an equivalence of prices after the GST is introduced.
“This will erase fears of an inflationary spiral due to the GST and may see prices stabilising and benefit consumers,” said Mani.
The Council will meet again on June 18 to take up residual issues including e-way bill and the rates for lottery.
“There has been an attempt to address the inverted duty structure in a few cases like tractors and textiles by reducing the rates on parts and job work services,” said Pratik Jain of PwC India.
Uday Pimprikar, Tax Partner, EY, said: “The telecom sector’s ask of a lower tax rate was ignored by the GSTCouncil. The 18 per cent rate imposed on the sector would increase the tax incidence. It is now important that the government engages with the industry to provide certainty and support for a smooth transition into GST.”
Six states are yet to pass the state GST (SGST) Bill in their respective state assemblies.
|Children’s colour books
|Movietickets (upto f 100)
|Pickles, mustard sauce
Source – http://www.business-standard.com [12-06-2017]