Modi government gave New Year’s gift to middle class consumers in the 31st meeting of GST council. The council decided to rationalize GST rates on many items and the new rates will be applicable from 1st January. Only luxury and sin items are now put in 28 percent tax slab which was intended for these products. The total number of items in highest tax bracket has been reduced from 34 to 28. Monitors and Television screens, Tyres, Power banks of Lithium-ion batteries have been brought to 18 percent tax slab from the earlier 28 percent slab. The movie tickets above hundred rupees were also put in 18 percent slab from 28 and tickets below 100 were put in 12 percent from 18 percent slab.
Finance Minister Arun Jaitley: Monitors and Television screens, Tyres, Power banks of Lithium-ion batteries have brought down from 28% to 18% slab. Accessories for carriages for specially abled persons have been brought down to 5%. pic.twitter.com/4rL1DF6NXl
— ANI (@ANI) December 22, 2018
Finance Minister Arun Jaitley on the decisions taken in GST Council meet: Movie tickets up to Rs 100 brought down to 12% and above Rs 100 has been brought down to 18% from 28% pic.twitter.com/BpOmhTj7Kj
— ANI (@ANI) December 22, 2018
FM: There are 28 items left in the 28% bracket if we include luxury & sin items. 13 items are from automobile parts & 1 is cement. Cement’s revenue is 13000 crore & automobile parts revenue is 20000 crore. If they are brought down from 28% to 18% implications are of 33000 crore https://t.co/EWaUBOd5tp
— ANI (@ANI) December 22, 2018
Finance Minister Arun Jaitley: The services supplied by the banks to Jan-Dhan account holders will be exempted from GST pic.twitter.com/tAQQQp4VV5
— ANI (@ANI) December 22, 2018
The council has taken care of people with disabilities and brought the carriages for people with disabilities from 28 percent to 5 percent category. Four items were put in 12 percent tax slab from 18 percent and one from 18 percent to 5 percent. The latest rationalization will cost revenue loss of 5500 crore in revenue collection. The rates were reduced on total of 40 items.
The industry expected that the rates will also be reduced on cement and automobile parts but this did not happen as reduction of taxes on these items was expected to incur huge impact on revenue. “There are 28 items left in the 28% bracket if we include luxury & sin items. 13 items are from automobile parts & 1 is cement. Cement’s revenue is 13000 crore & automobile parts revenue is 20000 crore. If they are brought down from 28% to 18% implications are of 33000 crore,” said Jaitley explaining the reason behind no change of slab for these products.
Since the implementation of the indirect tax regime on July 1, the council has rationalized rates 4 times in 2017 (October 6, November 10, January 18 and July 21). The first major rationalization was in November 2017 when 128 items including sanitary ware, lamp, fans, and chocolates were brought to 18 percent tax slab. The last rationalization was in July 2018 when the tax on 15 white goods like refrigerators, washing machines, and screen television was reduced.
The last four rationalizations reduced the tax collection by 40,000-50,000 crores. The next round of rationalization would further reduce the revenues for the council in short term. The rationalization will help the middle class which is somewhere between 200-400 million. The consumption trends in the country changed fairly in the post-liberalization era. The digital cameras, cement, TV screens etc. are now consumed by people of the middle class so keeping them in ‘sin goods’ which is meant for Alcohol, Paintings is treachery with the ‘common’ Indian people.
Earlier, a few days back PM promised to the people of the country that majority of the products would be brought in sub-18 percent or 18 percent tax category. “GST has given the society and entrepreneurs a simple and efficient tax system free of inspector raj. Broad-based consultations have led to changes in GST over time. Today, it is settled to a large extent. We are reaching a situation where 99% of items could be brought in 18% GST rate or lower. We are going in the direction of leaving only luxury items or sin goods in the 28% slab.” said the Prime Minister. The government is moving in the direction to deliver the promise.
