1. GST Council likely to flatten 28% tax slab

GST Council likely to flatten 28% tax slab

Rates to be cut on several items due to review of ‘equivalence principle’ in possibly the broadest rate revision to date.

By: | New Delhi | Published: October 20, 2017 6:41 AM
Goods and Services Tax, GST, GST Council, flatten 28% tax slab, GST tax slab The Goods and Services Tax (GST) Council is likely to announce tax rate cuts on several daily-use items that are currently under the highest slab of 28% at its next meeting in Guwahati on November 9-10.

The Goods and Services Tax (GST) Council is likely to announce tax rate cuts on several daily-use items that are currently under the highest slab of 28% at its next meeting in Guwahati on November 9-10. The items to attract lower tax of 18% or 12%, in possibly the broadest rate revision after the new tax was launched in July, may include certain types of furniture, plastic and ceramic pipes and electrical switches, among others, official sources said. The council had in May fixed 28% rate for nearly 230 items out of a total 1,211 items under GST on the basis of recommendations from the fitment committee. In subsequent meetings, it has cut rates on nearly 100 items including 47 in the 28% category. The fitment committee had followed a principle of equivalence in fixing rates, which means that items fell under the GST slabs (0%, 5%, 12%, 18% and 28%) nearest to the pre-GST tax incidence. However, the council is now having a rethink on this approach which it feels that put many items of mass consumption and/or from labour-intensive industries under 18% and 28%. This was was also pointed out by finance minister Arun Jaitley after the last council meet earlier this month. In the same meeting, the council approved an approach paper — which will look beyond the principle of equivalence — laying down the criteria for the fitment committee for rate revisions.

Speaking on the convergence of slabs under GST, revenue secretary Hasmukh Adhia told FE last week: “Convergence of slabs is a time-consuming process and is not likely to take place this year. However, the council could move items from higher to lower tax slabs based on certain principles enunciated in the approach paper.” The council has cut rates on goods and services in all its meetings since May, considering the representations from the industrial segments. However, it also raised the tax rate on tobacco products and compensation cess on cars after it was discovered that the earlier calculation had been erroneous. Items including school satchels and bags, toilet cases, kajal, CCTV, electrical transformers and printers have already been brought down from the highest slab.

Additionally, five items previously taxed at 5% were exempted from GST. Similarly, 19 items attracting 12% rates were cut to either 5% or exempted by the council in later months. The maximum number of items where tax revision took place belonged to the 28% slab where 37 items saw rates revised to 18% while the remaining items were placed in other lower slabs of 12%, 5% and 0%. Moreover, rates on 21 items were revised to lower slabs from 18% earlier while 19 items face lower rates than the original 12%.

  1. No Comments.

Go to Top