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Over the past three weeks, the Goods and Services Tax (GST) Council — comprising union and state finance ministers — announced the rates for 1,211 goods and around 500 services, all falling into four tax slabs: 5, 12, 18, and 28 percent. In addition, several mass-consumption items will attract zero tax. They were met with a flood of requests for revisions.
On 11 June, the council met to review the rates on the basis of representation made by the industries and traders. Finance Minister Arun Jaitley addressed the outcome of the review, saying, “After considering the recommendations, the GST Council has reduced the tax level in 66 out of 133 items on which representations were made by the industries”.
The overall weighted average of all tax rates decided by the council is much lower than the rates people pay today, he said. “Therefore, there will be an adverse revenue impact if other things remain equal. But we are also hoping for revenue buoyancy and a check on inflation that GST will ensure so as to make up for that loss”.
The finance minister added that under GST, traders, manufacturers, and restaurants with turnover of up to Rs 75 lakh can use the composition scheme with lower rates of 5, 2, and 1 percent, respectively, with lower compliance against Rs 50 lakh earlier. Whether or not the same increased turnover limit for the composition levy will apply in the case of special category states will be decided in the next council meeting on 18 June.
Jaitley also said that “in certain cases the rate fitment committee went beyond the equalization principle of maintaining the current tax incidence”.
The tax rate on job works was also lowered to facilitate the outsourcing of business activities.
Jaitley, however, hinted that the GST rate on hybrid cars will not be reviewed. The environmentally friendly hybrid cars will attract a 15 percent cess over and above the 28 percent GST rate, the same rate levied on large luxury cars and sport utility vehicles.
Rate increases and decreases following the 11 June review
S.No. Chapter /heading /sub-heading /tariff item Description of goods Earlier GST rate Revised GST rate Increase/decrease 1. 0506, 0507, 90 Bones and horn cores, bone grist, bone meal, etc. Hoof meal, horn meal, etc. 5% 0% Decrease 2. 0801 Cashew nut 12% 5% Decrease 3. 0801 Cashew nut in shell 12% 5% (under reverse charge) Decrease 4. 0806 Raisin 12% 5% Decrease 5. 1104 Cereal grains hulled 5% 0% Decrease 6. 1702 Palmyra jiggery 18% 0% Decrease 7. 20 (All goods) Preparations of vegetables, fruits, nuts, or other parts of plants, including pickle,murabba, chutney, jam, jelly 18%/12% 12% Decrease 8. 2103, 2103, 00, 2103 90 Ketchup and sauces (other than curry paste, mayonnaise, and salad dressings; mixed condiments and mixed seasoning) Mustard, Sauces 18% 12% Decrease 9. 2103 90 10,2103 90 30,2103 90 40 Curry paste, mayonnaise, and salad dressings, Mixed condiments and mixed seasonings 28% 18% Decrease 10. 2106 Bari made of pulses including mungodi 18% 12% Decrease 11. 2201 90 10 Ice and snow 12% 5% Decrease 12. 2501 Salt, all types 5% 0% Decrease 13. 27 Bio gas 12% 5% Decrease 14. 28 Dicalcium phosphate (DCP) of animal feed, grade conforming to IS specification No. 5470/2002 12% 0% Decrease 15. 30 Insulin 12% 5% Decrease 16. 29, 30, 3302 (i)Menthol and menthol crystals, (ii)Peppermint (mentha oil),(iii) Fractionated/de-terpenated mentha oil (DTMO), (iv) De-mentholised oil (DMO), (v) Spearmint oil, (vi) Mentha piperita oil 18% 12% Decrease 17. 3304 20 00 Kajal (other than kajal pencil sticks) 28% 0% Decrease 18. 3304 20 00 Kajal pencil sticks 28% 18% Decrease 19. 3307 Agarbatti 12% 5% Decrease 20. 3407 Dental wax 28% 18% Decrease 21. 3822 All diagnostic kits and reagents 18% 12% Decrease 22. 3926 Plastic beads 28% 12% Decrease 23. 3926 90 99 Plastic tarpaulin 28% 18% Decrease 24. 4202 (i) School satchels and bags other than of leather or composition leather, (ii) Toilet cases (4202 12 10), (iii) Hand bags and shopping bags of artificial plastic material (4202 22 10),of cotton (4202 22 20), of jute (4202 22 30), , vanity bags, (iv) Handbags of other materials excluding (4202 22 40), wicker work or basket work (4202 29 10) 28% 18% Decrease 25. 4820 Exercise books and notebooks 18% 12% Decrease 26. 4823 Kites 12% 5% Decrease 27. 4903 Children’s picture, drawing, or coloring books 12% 0% Decrease 28. 57 Coir mats, matting, and floor covering 12% 5% Decrease 29. 65 [All goods] Headgear and parts thereof 28% 18% Decrease 30. 6703 Human hair, dressed, thinned, bleached, or otherwise worked 28% 0% Decrease 31. 68 Fly ash blocks 28% 12% Decrease 32. 6810 11 90 Pre-cast concrete pipes 28% 18% Decrease 33. 6906 Salt-glazed stoneware pipes 28% 18% Decrease 34. 7015 10 Glasses for corrective spectacles and flint buttons 18% 12% Decrease 35. 71 Rough precious and semi-precious stones 3% 0.25% Decrease 36. 7607 Aluminum foil 28% 18% Decrease 37. 8215 Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs 18% 12% Decrease 38. 8308 All goods, including hooks and eyes 28% 18% Decrease 39. 84 Pawan chakki that is air-based atta chakki 28% 5% Decrease 40. 84 Fixed speed diesel engines 28% 12% Decrease 41. 4011 Rear tractor tyres and rear tractor tyre tubes 28% 18% Decrease 42. 8708 Rear tractor wheel rim, tractor centre housing, tractor housing transmission, tractor support front axle 28% 18% Decrease 43. 8423 Weighing machinery (other than electric or electronic weighing machinery) 28% 18% Decrease 44. 8443 Printers (other than multifunction printers) 28% 18% Decrease 45. 8482 Ball bearings, roller bearings, parts, and related accessories 28% 18% Decrease 46. 8504 Transformers industrial electronics 28% 18% Decrease 47. 8504 Electrical transformer 28% 18% Decrease 48. 8504 Static convertors (UPS) 28% 18% Decrease 49. 8521 Recorder 28% 18% Decrease 50. 8525 CCTV 28% 18% Decrease 51. 8525 60 Two-way radio (walkie talkie) used by defense, police, and paramilitary forces, etc. 28% 12% Decrease 52. 8528 Set top box for TV 28% 18% Decrease 53. 8528 Computer monitors not exceeding 17 inches 28% 18% Decrease 54. 8539 Electrical filaments or discharge lamps 28% 18% Decrease 55. 8544 Winding wires 28% 18% Decrease 56. 8544 Coaxial cables 28% 18% Decrease 57. 8544 70 Optical fiber 28% 18% Decrease 58. 8472 Perforating or stapling machines (staplers), pencil sharpening machines 28% 18% Decrease 59. 8715 Baby carriages 28% 18% Decrease 60. 9002 Intraocular lens 18% 12% Decrease 61. 9004 Spectacles, corrective 18% 12% Decrease 62. 9017 Instruments for measuring length, for use in the hand (for example, measuring rods and tapes, micrometers, calipers) 28% 18% Decrease 63. 9403 Bamboo furniture 28% 18% Decrease 64. 9504 Playing cards, chess board, carom board, and other board games, like Ludo, etc. (other than video game consoles and machines) 28% 12% Decrease 65. 9506 Swimming pools and padding pools 28% 18% Decrease 66. 9603 10 00 Muddhas made of sarkanda and phool bahari jhadoo 5% 0% Decrease 67. 9704 Postage or revenue stamps, stamp-post marks, first-day covers, etc. 12% 5% Decrease 68. 9705 Numismatic coins 12% 5% Decrease 69. 4823, 8472, 90 11,9101, 9102, 9021 Braille paper, braille typewriters, braille watches, hearing aids, and other appliances to compensate for a disability (These goods are covered in List 32 appended to notification No. 12/2012-Customs, dated 17.03.2012 and are already at 5% GST [Chapter 90]) – 5% Increase Source: GST India website
Overall, the government has taken a commendable step in responding to industry recommendations within such a short time span and reducing/modifying the rates of almost 50 percent of the items in question.
In the council’s next meeting on 18 June, they will take up residual issues related to the pending draft rules like the E-way Bill, rate for lottery, etc.
Jaitley said that, “Irrespective of the date on which it starts, some people will say they are not ready, so they have no option but to get ready”.
“With potentially two more council meetings, we will be down to the wire for July 1 implementation,” said Harishanker Subramaniam, national leader, indirect tax, EY India.
The government has been making sincere efforts to ensure hassle-free implementation of GST. Some of the steps taken in this regard are:
- Reduction in GST rates
- Launching of Twitter handle to answer queries
So now it’s time for us to gear up for the upcoming reforms under GST to ensure a smooth transition
GST and Impact on Businesses
The Goods and Services Tax (GST) promises to bring a single unified tax regime for India. But what exactly does a single unified tax regime mean and why is this better than what exists today.
For more detailsh ttps://www.udyogsoftware.com/gst-and-impact-on-businesses/The current situation is there are different taxes for different activities:
Each of these taxes will apply to different items sold and purchased, at different points in the supply chain and be paid by different parties. This leads to a situation where you can have certain items taxed under two taxes which increases costs. An example of this is off the shelf software which can attract value added tax and service tax, which can push up the cost of the software. Also, as the rules are not clear on how to apply the taxes to the sale of software this leads difficulties for businesses because there is not a standard rule to apply, and in an abundance of caution businesses will apply VAT and Service Tax.
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