- Date : 25/07/2018
- Read: 5 mins
The GST Council has reduced tax rates on over 50 items. Here's is a complete list of what becomes cheaper
The Goods and Services (GST) Council during its 23rd meeting came to the conclusion that over 50 items including refrigerators, washing machines and small televisions, would be moved from the highest tax slab of 28% to the 18% slab.
Items like perfumes, vacuum cleaners, hair dryers, shavers, mixer grinder, small televisions (up to 25 inches), lithium-ion batteries, cosmetics, paints, toiletries, fortified milk, rakhis, etc. have been lowered to 18%.
The Chair of the meeting finance minister Piyush Goyal said that this revised tax rate, which was decided in unison, will come into effect from July 27.
"Refrigerators, small televisions, of up to 25 inches, lithium-ion batteries, vacuum cleaners, domestic electrical appliances, such as food grinders, mixers....storage water heaters, immersion heaters, hair dryers, hand dryers, electric smoothing irons, among others have been brought to the 18% slab," Goyal said.
Related: GST 101: What India’s biggest tax reform means for you
Items exempted from tax
Additionally, in an effort to meet the demands of women’s groups, sanitary napkins are now exempted from 12% GST. The GST Council also exempted tax on items like rakhis, fortified milk and idols of deities made of stone, marble and wood.
Cuts across the board
Footwear: Earlier, 5% GST was levied on footwear priced up to Rs 500 and 18% for those over Rs 500. Now, all footwear priced up to Rs 1000 falls in the 5% bracket.
Sin goods: Items like cigarettes and tobacco remain in the top 28% slab.
Ethanol used in auto fuel blending will now be in the 5% bracket, a drop from the earlier 18%
Stones: Falling to 12% from 18%, so that they can be classified with ease, are rates on sandstone, worked up Kota stone, and other local stones.
Handicraft items: GST on a host of handicraft items such as purses, handbags, jewellery boxes, pouches and purses, wooden frames of paintings and photographs etc. have come down to 12% from 18%.
Furniture: Furniture too has seen a lowering to 18% from 28%.
E-books: E-books are now at 5%, sharply reduced from the earlier slab of 18%.
Related: Difference between Tax Exemption, Tax Deduction and Tax Rebate
Consumers stand to benefit
Hindustan Unilever Ltd and other consumer goods companies said that they would pass on the advantages of lower tax to consumers.
Every state had appealed to bring down the rates so that middle-income households could benefit. Furthermore, the GST Council concluded that it will focus on economic growth and job creation, and increase revenue consideration.
PM Modi commended the Council’s decisions, saying that the government’s decisions and functioning are “people-inspired, people-friendly, and people-centric”.
According to sources, this tax reduction will possibly cost the exchequer around Rs 8000-10,000 crore a year.
Relief for the hotel industry
GST was being levied by hotels on the declared tariff even when discounts were offered. Despite the actual transaction costs being lower than the declared cost, customers had to pay tax on the declared cost.
But now, the Council has decided that GST will be charged only on the transaction value of hotel rooms and not the declared tariffs. The hospitality sector can now breathe a sigh of relief.
Effortless filing of returns
About 93% of GST-registered taxpayers are businesses with a turnover of up to 5 crore. A new move of filing quarterly returns will favour them. However, tax will need to be paid on a monthly basis.
So far, quarterly returns were filed by businesses that had an income of up to Rs 1.5 crore.
Additionally, another amendment was approved that allowed businesses with multiple places of business inside the same state to opt for multiple registrations.
The 28th meeting focused on giving maximum priority to simplification and rationalisation.
It could take some time for the revamped GST rates to come into existence across the board, as some necessary changes need to be made in the GST network.
Over the past 13 months, the 28% slab excluded only a few commodities. So this is a major step towards rationalising this bracket.
Additionally, over 40 amendments were given the green signal by the Council, which saw the threshold of the compensation scheme rise to Rs 1.5 crore, allowing multiple businesses to register.
Related: Tax-saving components of your CTC
The way ahead
The Council is expected to next meet on August 4, 2018, to discuss matters pertaining to the MSME sector and it will also look at ways to incentivise digital transactions through the BHIM app and RuPay cards.
Businesses will be given time till August 31, to migrate to the implemented GST regime and those who fail to do so will have to bear a late fee.
Since the rollout of GST, this is the fourth time that the rates have been rationalised. In a meeting on November 2017, rates of 100+ items in the 28% bracket were reduced.
The present change will benefit both consumers and businesses. Everyday items will become cheaper, and this will boost the economy due to the possible increase in consumption.
Additionally, the scheme is expected to become less taxing and more compliance-friendly.
The Goods and Services (GST) Council during its 23rd meeting came to the conclusion that over 50 items including refrigerators, washing machines and small televisions, would be moved from the highest tax slab of 28% to the 18% slab.
Items like perfumes, vacuum cleaners, hair dryers, shavers, mixer grinder, small televisions (up to 25 inches), lithium-ion batteries, cosmetics, paints, toiletries, fortified milk, rakhis, etc. have been lowered to 18%.
The Chair of the meeting finance minister Piyush Goyal said that this revised tax rate, which was decided in unison, will come into effect from July 27.
"Refrigerators, small televisions, of up to 25 inches, lithium-ion batteries, vacuum cleaners, domestic electrical appliances, such as food grinders, mixers....storage water heaters, immersion heaters, hair dryers, hand dryers, electric smoothing irons, among others have been brought to the 18% slab," Goyal said.
Related: GST 101: What India’s biggest tax reform means for you
Items exempted from tax
Additionally, in an effort to meet the demands of women’s groups, sanitary napkins are now exempted from 12% GST. The GST Council also exempted tax on items like rakhis, fortified milk and idols of deities made of stone, marble and wood.
Cuts across the board
Footwear: Earlier, 5% GST was levied on footwear priced up to Rs 500 and 18% for those over Rs 500. Now, all footwear priced up to Rs 1000 falls in the 5% bracket.
Sin goods: Items like cigarettes and tobacco remain in the top 28% slab.
Ethanol used in auto fuel blending will now be in the 5% bracket, a drop from the earlier 18%
Stones: Falling to 12% from 18%, so that they can be classified with ease, are rates on sandstone, worked up Kota stone, and other local stones.
Handicraft items: GST on a host of handicraft items such as purses, handbags, jewellery boxes, pouches and purses, wooden frames of paintings and photographs etc. have come down to 12% from 18%.
Furniture: Furniture too has seen a lowering to 18% from 28%.
E-books: E-books are now at 5%, sharply reduced from the earlier slab of 18%.
Related: Difference between Tax Exemption, Tax Deduction and Tax Rebate
Consumers stand to benefit
Hindustan Unilever Ltd and other consumer goods companies said that they would pass on the advantages of lower tax to consumers.
Every state had appealed to bring down the rates so that middle-income households could benefit. Furthermore, the GST Council concluded that it will focus on economic growth and job creation, and increase revenue consideration.
PM Modi commended the Council’s decisions, saying that the government’s decisions and functioning are “people-inspired, people-friendly, and people-centric”.
According to sources, this tax reduction will possibly cost the exchequer around Rs 8000-10,000 crore a year.
Relief for the hotel industry
GST was being levied by hotels on the declared tariff even when discounts were offered. Despite the actual transaction costs being lower than the declared cost, customers had to pay tax on the declared cost.
But now, the Council has decided that GST will be charged only on the transaction value of hotel rooms and not the declared tariffs. The hospitality sector can now breathe a sigh of relief.
Effortless filing of returns
About 93% of GST-registered taxpayers are businesses with a turnover of up to 5 crore. A new move of filing quarterly returns will favour them. However, tax will need to be paid on a monthly basis.
So far, quarterly returns were filed by businesses that had an income of up to Rs 1.5 crore.
Additionally, another amendment was approved that allowed businesses with multiple places of business inside the same state to opt for multiple registrations.
The 28th meeting focused on giving maximum priority to simplification and rationalisation.
It could take some time for the revamped GST rates to come into existence across the board, as some necessary changes need to be made in the GST network.
Over the past 13 months, the 28% slab excluded only a few commodities. So this is a major step towards rationalising this bracket.
Additionally, over 40 amendments were given the green signal by the Council, which saw the threshold of the compensation scheme rise to Rs 1.5 crore, allowing multiple businesses to register.
Related: Tax-saving components of your CTC
The way ahead
The Council is expected to next meet on August 4, 2018, to discuss matters pertaining to the MSME sector and it will also look at ways to incentivise digital transactions through the BHIM app and RuPay cards.
Businesses will be given time till August 31, to migrate to the implemented GST regime and those who fail to do so will have to bear a late fee.
Since the rollout of GST, this is the fourth time that the rates have been rationalised. In a meeting on November 2017, rates of 100+ items in the 28% bracket were reduced.
The present change will benefit both consumers and businesses. Everyday items will become cheaper, and this will boost the economy due to the possible increase in consumption.
Additionally, the scheme is expected to become less taxing and more compliance-friendly.
