In the last one year, the GST Council pruned the 28% slab by reducing taxes on 191 goods, leaving just 35 items, including the digital camera, air conditioners, video recorders, dishwashing machine and automobiles, in the highest tax bracket.
GST Council Meet: With a view to provide some respite to common people, the Goods and Services Tax (GST) Council reduced tax rates on several consumer products from TV sets up to 32 inches to movies tickets. A total of 33 items have been moved from 18% GST slab to 12% and 5%. Also, 7 items have been brought to 18%, lower from 28%. Finance Minister Arun Jaitley said that the recommendations by the fitment panel have been considered in today’s meet. The 31st GST Council meeting chaired by Finance Minister Arun Jaitley at Vigyan Bhawan was attended by finance ministers all the states.
“There are 28 items left in the 28% bracket if we include luxury & sin items. 13 items are from automobile parts and one is cement. Cement’s revenue is 13,000 crore and automobile parts revenue is 20,000 crore. If they are brought down from 28% to 18% implications are of Rs 33,000 crore,” Finance minister Arun Jaitley said in press briefing post meeting.
GST was implemented on July 1, 2017 and there were about 226 goods in the 28% category back then. In the last one year, the GST Council pruned the 28% slab by reducing taxes on 191 goods, leaving just 35 items, including digital camera, air conditioners, video recorders, dishwashing machine and automobiles, in the highest tax bracket.
Here are the key highlights from today’s meeting:
- Today’s GST rate reduction will have an overall impact on revenue of Rs 5500 crore.
A committee to be formed to look into revenue loss of state
GST collection lower than expectations. Most of the goods used by the common man now below 28 per cent slab except cement and automobile goods
- 34 items that are luxury or sin goods are out of our process of rate rationalization, thus have been kept in 28% slabs
- Rates have been reduced for 22 items under the 28% slab
- Video games, power bank of Lithium iron batteries, small sport related items, accessories for carriages for disabled removed from 28% slab and brought into 18% slab
- Monitors and screen up to 32 inches, gearboxes, retreated tyres, power banks of lithium-ion batteries, video games and other sports-related items have been reduced from 28% to 18%
- GST rate on special flights for pilgrims lowered for the economy at 5% and business class at 12%
- GST on movie tickets of less than Rs 100 cut from 18% to 12%,
- For tickets above than Rs 100, GST reduced from 28% to 18%
- Revenue implication for a reduction in cinema tickets is Rs 900 crore.
- Air conditioners, dishwashers largely used by upper segment of society, left at 28%
- Cement rate reduction has not been taken up as it has huge revenue implications
- The services supplied by the banks to Jan-Dhan account holders will be exempted from GST.
The new rate reduction will be applicable from January 1. Now the GST council will discuss taxation of residential property in the real estate sector in the next meeting scheduled in January, said Finance Minister Arun Jaitley. A decision on disaster cess will also be taken in the next meet. A GoM is in the process of finalising the report.
The GST Council meeting is being held against the backdrop of lower than budgeted collection so far. The council may also discuss ways to increase collection and stop tax evasion. The government has always said that more items would be brought down to 18% or less rate but only if there was enough revenue buoyancy.
In the first eight months (April-November) of the current fiscal, the government has mopped up over Rs 7.76 lakh crore from GST. The 2018-19 budget had estimated annual GST collection at Rs 13.48 lakh crore, which means a monthly target of Rs 1.12 lakh crore.