GST Council Meet Updates: Big Rate Cuts For Consumer Durables, Paints And Cosmetics; Sanitary Napkins Exempt
GST Council cuts tax rate on consumer durable items like washing machines, water coolers and refrigerators.
Watch: Assessing The Impact
Key Tax Rate Changes
Exempt from GST:
- Sanitary pads
- Deities made of stone, marble or wood
- Raakhis, without any precious metals
- Raw material used in brooms
- Commemorative coins circulated by the RBI or government
- Saal leaves
- Fortified milk
From 12 percent to 5 percent:
- Handloom dari
- Fertiliser grade phosphoric acid
From 28 percent to 18 percent:
- Lithium-ion batteries
- Vaccum cleaners
- Food grinders, mixers
- Shavers, hair clippers
- Storage water heaters
- Electric smoothing irons
- Water cooler
- Ice cream freezer
- Refrigerators
- Hand dryes
- Cosmetics
- Perfumes
- Scents
- Paint
- Varnishes
Other changes:
- GST on ethanol sold to oil companies for blending with petrol and diesel reduced to 5 percent from 18 percent earlier
- GST on imported urea reduced to 5 percent
- GST on E-books reduced to 5 percent from 18 percent
- GST for hotels to be charged on the actual price that the customer pays and not on the declared tariffs
Major Step In Rationalising 28% Slab: Jaitley
The 28 percent GST slab has been narrowed down to only a few commodities now, says Union Minister Arun Jaitley.
Today's Changes Will Improve Compliance: Haryana FM
Haryana’s Finance Minister Captain Abhimanyu said the move to ask taxpayers with turnover up to Rs 5 crore to file returns only once a quarter will improve compliance. He added that the GST Council found it appropriate at the current juncture to experiment with rate changes since the revenue proceeds appear to be on track to reach set targets.
Assam FM Says Rate Cuts To Cost Rs 6,000 Crore Of Revenue
Himanta Biswa Sarma, finance minister of Assam, has said that reducing the rates of goods from 28 percent to 18 percent would result in a revenue loss of Rs 6,000 crore to the exchequer, as an initial estimate. But he added that in time greater demand would bring revenue buoyancy.
Positive Rate Rationalisations: EY's Abhishek Jain
The Council meeting was quite positive “with some very significant rate rationalisations”, said Abhishek Jain, Tax Partner at EY India. The tax rate cuts announced today would “bring lot of cheer to both end customers and industry players”, he said.
Quarterly GST return filing for taxpayers having turnover up to Rs 5 crore would significantly ease the compliances for this segment. Big relief for hotels as GST rate of 28 percent would not apply if the actual tariff value is less than Rs 7,500 even though the published tariff may be more than that. This will also ease the IT systems for hotel players. Reduction in GST rate of ethanol for use by oil companies to 5 percent is again welcome as major petroleum products are outside GST and this would help reduce their cost.Abhishek Jain, Tax Partner, EY India
Next Meet On August 4
The GST Council will meet next on August 4 to discuss the problems faced by small traders and businesses and entrepreneurship. The meeting will be completely focussed on the MSME sector, Goyal said.
Deadline For GST Registration Till August 31
Taxpayers who are yet to register under GST will be given on final extension till August 31 and any late penalty would be waived off.
Relief For Textile Industry
The textile industry will now be allowed to refund their unused input tax credits on account of the inverted duty structure. This will be applicable from July 27.
Simplified Filings
Taxpayers with turnover up to Rs 5 crore will now find it easier to file returns. While they will continue to pay GST monthly, they will only file returns once a quarter.
93 percent of taxpayers will file GST returns quarterly, Goyal said.
- Threshold for composition dealers to be increased to Rs 1.5 crore from Rs 1 crore earlier.
- Taxpayers who also provide services of up to 10 percent of their turnover can now avail the composition scheme.
- Reverse charge mechanism to be deferred for one year.
The simplification of return and allowing traders below Rs 5 crore turnover to file quarterly returns will positively reduce compliance. The difference in timing of returns for above and below Rs 5 crore turnover assessees may, however, impact timing of availment of credit. The rate rationalisation will substantially reduce the tax burden for a large number of commodities.Bipin Sapra, Tax Partner, EY India
Watch: Piyush Goyal Addresses Media
PwC's Indirect Tax Expert Pratik Jain's Key Takeaways
Turnover Threshold For Composition Scheme Increased
The GST council has approved increasing the turnover threshold for the composition scheme to Rs 1.5 crore from Rs 1 crore, according to press release from the Bihar government. Composition dealers will continue to pay monthly GST, but will need to file returns only once in a quarter.
The release also said that the Council simplified tax return form for the tax payers with a turnover of more than Rs 1.5 crore. The simplified form will not be of more than two pages.
Bihar FM Says Majority GST Dealers To Be Exempt From Monthly Filings
Televisions Up To 26 Inches To Be Cheaper?
The rate on televisions with screen size up to 26 inches (68 centimeters) is expected to be reduced to 18 percent from 28 percent earlier, a government official has said.
The rate cuts will help boost sales, according to electronics retailer Vijay Sales.
It is a positive move by the government after a long time. This year, sales growth were flat to low single-digit. Since GST rates have been lowered, sales growth can move up to 8-10 percent.Nilesh Gupta, MD, Vijay Sales
GST Rate On Paint Cut To 18%
The tax rate on paint has been cut to 18 percent from 28 percent, according to a government official.
Reacting to this development, Berger Paints told BloombergQuint that it will pass the benefit to the consumer with immediate effect.
We have been asking the government to do this for some time now. It is a good move by the government. I am sure this will drive volumes for the sector, and the average growth rate will increase by 5-6 percent from 10 percent. We will instantly reduce prices of our paints by 10 percent.Abhijit Roy, MD and CEO, Berger Paints
Kansai Nerolac too said they will follow Berger in passing on the rate cut to the consumers.
This is a bold step taken by the government. We were contemplating on taking price hikes as raw materials costs are increasing. But now we will support the government and will drop prices by 10 percent.HM Bharuka, MD, Kansai Nerolac
GST Council Reduces Rates On White Goods
The Goods and Services Tax Council at its meeting today has reduced the tax rate on about 17 white goods including washing machines and refrigerators to 18 percent from 28 percent, a government official said on the condition of anonymity. The formal announcement is to be made by Interim Finance Minister Piyush Goyal shortly. The rate on ethanol used for blending with petrol and diesel was also reduced to 5 percent from 18 percent earlier, the official added.
The Council has cut down the tax rate on sanitary napkins to zero from 12 percent earlier, according to Manish Sisodia, finance minister of Delhi.
(Corrects earlier version that also included air conditioners in the list of goods for which tax was reduced)
Interim Finance Minister To Announce GST Changes Shortly
The Goods and Services Tax Council was expected to discuss the revision of tax rates on a few items, about 46 amendments in the GST law, and simplification of returns.