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Published On: Fri, Nov 10th, 2017

New GST Changes: 50 items retained in the 28% rate slab.28% ,Tax Cut on 177 Items

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gstcouncil-kq3G--621x414@LiveMintGUWAHATI : GST Council is mulling keeping only 50 items in the 28% tax slab,  At present, the bracket includes more than 200 items.

The Rate Fitment committee had proposed keeping 68 items in the bracket. Pruning this tax bracket may result in revenue loss of Rs 20,000 crore.

In a meeting held on Friday in Guwahati, GST council decided to drop items used by common man from the highest tax slab and lower their taxes to 18%. GST council largely consists of state finance ministers headed by central finance minister Arun Jaitley. Bihar Deputy CM, who is also a member of the GST Council, says goods used by common man have been removed from the 28% slab. “Only luxury goods and items such as tobacco and cigarettes have been kept in the 28% slab.”

The Group of Ministers (GoM) has also suggested that eating out at hotels that have room tariff of more than Rs 7,500 should attract a uniform 18 per cent rate instead of any separate category for a 5-star hotel, which currently falls under the 28 per cent bracket. With regard to traders, the GoM came up with a two-pronged approach for taxation under the composition scheme. It suggested that traders who want to exclude sale proceeds of tax-free items from turnover can pay 1 percent GST. However, for those who pay tax on total turnover, the tax rate has been proposed at 0.5 per cent.

The Group of Ministers (GoM) had also suggested that eating out at hotels that have room tariff of more than Rs 7,500 should attract a uniform 18 per cent rate instead of any separate category for a 5-star hotel, which currently falls under the 28% bracket. With regard to traders, the GoM came up with a two-pronged approach for taxation under the composition scheme. It suggested that traders who want to exclude sale proceeds of tax-free items from turnover can pay 1% GST. However, for those who pay tax on total turnover, the tax rate has been proposed at 0.5%.

Bihar Deputy Chief Minister Sushil Kumar Modi, who is also a member of the GST Council, said goods used by common man have been removed from the 28% slab. “Only luxury goods and items such as tobacco and cigarettes have been kept in the 28% slab.” The Rate Fitment committee had proposed keeping 68 items in the bracket.
In what can be deduced as the biggest re-jig in GST rates, only 50 out of more than 200 items have been retained in the 28% rate slab. Luxury items and goods such as tobacco are the ones that will attract 28% tax from now on. Besides, making the composition scheme more attractive is on the agenda and as per the Group of Ministers (GoM) recommendations, the GST Council may decide to allow businesses in the inter-state trade to opt for the arrangement.
The GoM had also suggested slashing tax rate to 1 per cent for manufacturers and restaurants opting for the scheme from 2 per cent and 5 per cent, respectively. It was in favour of doing away with the tax rate distinction between AC and non-AC restaurants, those which are not covered under the composition scheme and tax them at a flat 12 percent. Currently, non-AC restaurants are taxed at 18 per cent.

The GST Council, comprising state finance ministers, is also set to review the GST returns filing cycle and make it taxpayer-friendly. The Council may rationalise rates in sectors where the total incidence of taxation has gone up because the goods were either exempt from excise or attracted lower VAT rates under the previous indirect tax regime, PTI reported. As the Council tries to accommodate industry concerns on tax rates, after estimating the impact on revenue, a rationalisation of items in the 28 per cent tax bracket is expected.
GST Council’s meeting comes amid criticism of the government’s implementation of GST, the country’s biggest tax reform since Independence. Opposition parties have alleged that the timing and implementation of GST has brought small traders and business to their knees.

Congress leaders including Puducherry Chief Minister V Narayanasamy, Punjab Finance Minister Manpreet Singh Badal and Karnataka Agriculture Minister Krishna Byre Gowda led protests outside the Guwahati hotel where the meeting is being held and alleged that all but five states have reported revenue losses after the launch of GST.
The Congress has accused the BJP-led government of not heeding their warnings earlier and agreeing to review the GST rates now only with an eye on next month’s crucial assembly elections in Gujarat, where the important voter group of small traders is upset with the new tax regime.

Congress vice president Rahul Gandhi has in an aggressive campaign in Gujarat labelled GST as the “Gabbar Singh Tax” (after the villain in famous Bollywood film Sholay) and urged the state’s traders to reject the BJP, which has ruled the state for the last 22 years. The notes ban and GST, the Congress leader said, are “twin torpedoes” that have “killed the economy.”
Prime MInister Narendra Modi has used his public meetings in Gujarat to emphasise the long-term gains that are expected of demonetisation and the GST, and has said those who oppose them are weakening the cause of fighting corruption.(With Agency Inputs ).

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