A weaver is seen through threads of Eri silk as he operates a wooden handloom at a mill in Udalgudi, Assam (Photographer: Udit Kulshrestha/Bloomberg)

GST Council To Mull Rate Cut On Items With ‘Low Revenue Impact’ On July 21

The Goods and Services Tax Council may consider a reduction in tax rates on a host of items with low revenue implications as part of the tax rationalisation exercise in its next meeting on July 21.

The items which could be considered for cutting of tax rates might include sanitary napkins, handicrafts and handloom goods, besides certain services. That comes after several industry bodies and stakeholders have been demanding a duty cut on items, especially those linked to general health and employment generation in unorganised sector.

The Council will take up the issue of rationalisation of taxes on various commodities in view of demands raised by stakeholders, a government official said. It would focus mainly on those items which are of general consumption, and have low revenue implication, the official added.

Most handloom and handicraft products, as well as sanitary napkins are currently taxed at 12 percent, and there are demands to exempt them from the levy.

Under the GST regime, there are four rates – 5 percent, 12 percent, 18 percent and 28 percent. Rolled out on July 1, 2017, GST had subsumed over a dozen local levies. The Council had, in its meeting in January 2018, decided to slash the GST rate on 54 services and 29 items.

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In its November 2017 meeting, the Council had removed 178 items from the highest 28 percent category, while cutting tax on all restaurants outside starred-hotels to 5 percent.

In the first year of GST in 2017-18, the government earned Rs 7.41 lakh crore from the tax since its roll out in July. The average monthly collection was Rs 89,885 crore. In the current fiscal, the collections in April touched a record Rs 1.03 lakh crore, followed by Rs 94,016 crore in May and Rs 95,610 crore in June.

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