The Goods and Services Tax (GST) Council on Saturday cut rates on 23 items such as TV and movie tickets keeping the tax rate unchanged on cement and auto parts.
In addition, the Council proposed to reduce GST rates from 28% to 18% on six of the items.
Retire tires, video games and sports equipment, movie tickets, billiards and snooker, and lithium battery power banks will attract 18 percent GST.
Wheelchair accessories have also been proposed to be brought under 28% to 5% bracket.
FM Arun Jaitley said that the recommendation of the GST Council’s fitment committee on rate rationalization and balance revenue flow was considered.
During the 31st meeting of the GST Council, the cement rate was left unchanged at 28 percent because of its huge revenue gap.
Jaitley said that the reduction of rates on cement and auto parts will result in a loss of Rs 13,000 crore and Rs 20,000 crore respectively on the public exchequer.
Apart from this, the council also recommended reducing GST on solar energy production plants and renewable energy items.
GST rates reduced to 18 percent on a movie ticket above Rs 100.
This move came after Prime Minister Narendra Modi promised to bring most of the goods under 18 percent or less under the GST slab.
“Today, the GST system has been set up to a great extent and we are working in a situation where 99 percent of things will attract sub-18 percent GST slab,” Modi had earlier said that the highest tax slab ( 28 percent)) will be limited to luxuries and sins.
Now the council will meet in January next year.
The rate cut is important because it is the biggest change in the GST slab before the 2019 general elections.
The government wants to effectively set 18 percent as the highest GST tax slab, except for two broad categories of goods and services.
More than 1,200 items and services fall into four broad tax slabs – 5, 12, 18 and 28 percent.
At present, 28 percent of slabs have about 40 goods and services, in addition to other items, including subtract and luxury goods.
Reduction in rates is now a plus on GST revenues, which is less than the targeted target of more than 12 lakh crores for FY19.
This can be achieved if the average monthly mop is around Rs. 1 lakh crores.
In the last eight months, tax mop-up has crossed Rs 1 lakh crore twice in April and October. Revenue collection from GST declined to Rs 97,637 crore in November, which was Rs 1 lakh crore in October.
1. Here are 10 things to know:
- Now, 28 percent slabs have been limited to luxury and sin items except auto parts and cement – which can not cut tax rates due to high revenue implications
- GST council also removed four items out of 18 percent slab, three of these four were taken to the slab of 12 percent, while one was shifted to 5 percent.
- The three items on which GST will now be taxed 12%, instead of existing 18%, articles of natural cork are included, and the cork is roughly squared or de-bagged. Marble debris has been shifted from 18% to 5% tax slab.
- GST on movie tickets costing up to Rs. 100 has been cut from 18 percent to 12 percent, while the ticket is Rs.
- 100 will attract an 18 percent tax, as it was 28 percent earlier, there would be revenue implication of the rupee. 900 million, Mr. Jaitley said.
- 32-inch monitors and TV screens and power banks will attract 18 percent GST, while 28 percent were earlier.
- The Government said that the financial inclusion plan will be exempted from the GST by the banks offering services to the customers holding basic savings bank deposits (BSBD) accounts under public funds.
- The Finance Minister said that rate rationalization is a continuous process.
- “The next goal will be rate rationalization in cement and when the power improves,” he said.
- The move to GST rates will result in an annual revenue loss of Rs. 5,500 crores, Mr. Jaitley said.
- GST, the government’s largest tax reform, determines the rate of 28 percent to 5 percent on most commodities, replacing an array of central and state duties (with agency input)