In its 31st meeting today, the Goods and Services Tax Council slashed tax rates on seven items previously placed in the highest tax slab under the indirect tax regime. Rationalising the 28 per cent tax slab, the all-powerful council pruned GST rates of six items to 18 per cent slab and one item to five per cent slab.
The GST council changed GST rates for a total of 22 items under the tax regime. The new tax rates will come into effect from January 1, 2019 via Gazette notifications and circulars.
Approving the fitment committee recommendations, the GST Council slashed tax rates for monitors and televisions up to 32 inches, used rubber tyres, power banks using li-ion batteries, digital cameras and video recorders, video game consoles and other sports equipments from 28 per cent to 18 per cent. Pulleys, transmission shafts and cranks, gear boxes etc have also been shifted to 18 per cent tax slab.
Parts and accessories of wheelchairs and other carriages for disabled persons will now attract GST at five per cent instead of 28 per cent. We haven't reduced it all the way to nil so that they are liable for input tax credit, Finance Minister Arun Jaitley said while talking to reporters after the GST Council meeting.
This leaves 34 items in the 28 per cent GST slab, including luxury and sin goods which are beyond the scope of rationalisation.
Contrary to speculations, cement and automobile parts were not considered for tax rate cuts by the GST Council today on account of revenue implications. Air conditioners and dishwashers were not taken up for GST rate cut today as they are used only by the high-income groups in India, Jaitley said.
Frozen or preserved vegetables have now been exempt from the GST regime. These used to be taxed at five per cent under the indirect tax regime.
GST rate on cinema tickets up to Rs 100, which earlier was at 18 per cent, has been brought down to 12 per cent. Additionally, movie tickets which had a GST of 28 per cent will now be taxed at 18 per cent.
Religious pilgrims travelling in special flights by Ministry of External Affairs will have to pay GST equal to that on normal air tickets from now instead of the earlier 18 per cent, Jaitley said. Third party insurance for goods carrying vehicles has also been reduced to 12 per cent from 18 per cent. Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY) have been exempted from GST altogether.
The GST Council also referred certain matters to various committees in its meeting today. Taxation of residential properties in real estate sector has been referred to Law Committee and Fitment Committee for study.
The Council also referred matters including composition scheme for small service providers, threshold limit of exemption under GST regime, and tax rates for lotteries to different panels. These matters will be deliberated upon in the next GST meeting slated for January.
A Group of Minister comprising seven ministers has been formed to study the data related to the shortfall of GST revenue in certain states. This ministerial group will take expert advice from the National Institute of Public Finance and Planning in the process.
Edited by Vivek Punj