The GST Council has pruned the 28 per cent slab by cutting tax rates on 191 goods over the last one year, leaving just 35 items, including AC, digital camera, video recorders, dishwashing machine and automobiles, in the highest tax bracket.
"Out of the 49 items now taxed at the highest rate of 28%, rates on 17 have been reduced to 18%", Pratik Jain, partner & leader, indirect tax, PwC, said in a note. With the stabilisation of revenue, the rate on many items were gradually reduced.
The GST on some commodities has been slashed from 18 per cent to five per cent, including ethanol, and solid bio-fuel pellets. They demanded the withdrawal of the 12 per cent GST on the pads. So far, footwear up to Rs 500 attracted 5 per cent GST, and those having retail sale price of over Rs 500 attracted 18 per cent rate. The Finance Minister also informed that several products inclusing the sanitary napkins are now have been kept outside the GST ambit. "Money in the hands of all sections of society- the poor, households, women, farmers and senior citizens", Goyal tweeted late night. "The decision was taken by the GST Council in which Congress-led governments are also involved".
Tax filers with an annual turnover of less than Rs. 5 crore a year need to file returns on a quarterly basis while paying tax on a monthly basis.
The Finance Minister said, there will be minimal impact of these decisions on revenue collections. On the revenue loss from these cuts, he said with simplification of processes, compliance would improve which would in turn boost revenue.
Sources, however, said the tax rate reduction is likely to cost around Rs 8,000-10,000 crore annually to the exchequer.
GST at the rate of 28 per cent in levied if hotel room rent exceeds Rs 7,500.
It was meant to unify the over US$2 trillion economy into a single market, with four tax rates of 5, 12, 18 and 28 per cent.
"I think all women will be happy to know that sanitary pads will now have 100 per cent exemption".
The council also deferred the implementation of reverse charge mechanism by another year and now it will come into force from October next year.
Before GST was implemented, sanitary napkins were taxed up to 14.5 per cent, based on the states.
The GST Council will next hold a meeting on August 4, exclusively catering to the needs of the Micro, Small and Medium Enterprise (MSME) sector.
GST on handbags, jewellery box, wooden box for paintings, artware of glass, stone endeavour, ornamental framed mirrors, handmade lamps etc has been reduced to 12%, the Finance Minister said.
Consumer-durable makers welcomed the government's move, saying it will help domestic manufacturing and create more employment opportunities, the Consumer Electronics and Appliances Manufacturers Association said. It was the first time that Piyush Goel chaired the meeting of the GST Council.