GST rates to fall as govt plans biggest overhaul of rate slabs
06 Nov 2017
The government is planning an overhaul of the slab rates under the goods and services tax (GST) regime, in bid to improve the ease of doing business for domestic businesses as well.
Prime Minister Narendra Modi also on Saturday hinted that more measures would be taken for businesses for ease under the GST regime. ''As you all know, GST is the biggest tax reform in the Indian economy. And it impacts many aspects of doing business. With GST, we are moving towards a modern tax regime, which is transparent, stable and predictable,'' Modi said.
The GST Council, chaired by finance minister Arun Jaitley, is likely to lower the 28 per cent GST on common use items like shampoo, according to reports.
The GST Council, at its next meeting on 10 November, is likely to cut rates on handmade furniture, plastic products and daily use items, according to reports.
At present, all types of furniture attract 28 per cent tax under GST. Wooden furniture is handmade by unorganised sector artisans and is mostly used by middle-class families and there have been demands for lowering tax incidence on them. Also, some items of plastic attract 18 per cent GST but goods like shower baths, sinks, wash basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware of plastics attract 28 per cent levy.
The Group of Ministers (GoM) headed by Odisha finance minister has recommended lowering tax rates on air-conditioned restaurants from 18 per cent to 12 per cent, which would help ease the pressure on both diners and restaurants.
The GST Council meeting on 6 October had decided a reduction in rates applicable to diesel engine parts and pumps from 28 per cent to 18 per cent. The council also lowered tax rates on 27 products and some services, while offering relief to exporters and small and medium enterprises (SMEs).
At present, the GST lists taxable items under four primary tax slabs - low rate of 5 per cent, standard rates of 12 per cent and 18 per cent, and high rate of 28 per cent. In addition, there is a 15 per cent cess on some non-essential and luxury items.
Other than this, gold and jewellery are taxed at a concessional GST rate of 3 per cent, while rough diamonds are having a 0.25 per cent levy.
There is, however, no mention yet on bringing petroleum fuel products under the GST regime.
The government is also expected to offer further relief to small and medium enterprises (SME), by rationalising tax rate in sectors where the total incidence has gone up because the goods were earlier either exempt from excise or attracted lower VAT rates in the previous indirect tax regime.
