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Changes in GST rates after 23rd council meeting held in Guwahati, Assam.

In the 23rd GST Council meeting headed by the Finance minister Arun Jaitley, that took place in Guwahati, Assam on November 10, 2017, the council has recommended some major shift in items in the GST (Goods and Service Tax) tax bracket.

In the meeting, the council has taken the 28% tax slab into reconsideration and decided to keep the highest 28% tax on luxury and sinful items. Hence, 177 items have been shifted to the 18% tax bracket.

There were 227 items in the 28 per cent slab. The fitment committee had recommended that it should be pruned to 62 items. But the GST Council has further pruned 12 more items.

18% to 12% Tax bracket

Goods

  • Condensed milk
  • Refined sugar and sugar cubes
  • Pasta
  • Curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasoning
  • Diabetic food
  • Medicinal grade oxygen
  • Printing ink
  • Hand bags and shopping bags of jute and cotton
  • Hats (knitted or crocheted)
  • Parts of specified agricultural, horticultural, forestry, harvesting or threshing machinery
  • Specified parts of sewing machine
  • Spectacles frames
  • Furniture wholly made of bamboo or cane

Services

Services that are kept under this tax bracket are

  • state – run lotteries,
  • Non – AC hotels,
  • business class air ticket,
  • fertilisers,
  • work contracts

28% to 18% Tax bracket

Goods

  • Wire, cables, insulated conductors, electrical insulators, electrical plugs, switches, sockets, fuses, relays, electrical connectors
  • Electrical boards, panels, consoles, cabinets etc for electric control or distribution
  • Particle / fibre boards and ply wood. Article of wood, wooden frame, paving block
  • Furniture, mattress, bedding and similar furnishing
  • Trunk, suitcase, vanity cases, brief cases, travelling bags and other hand bags, cases
  • Detergents, washing  and cleaning preparations
  • Liquid or cream for washing the skin
  • Shampoos; Hair cream, Hair dyes (natural, herbal or synthetic) and similar other goods; henna powder or paste, not mixed with any other ingredient;
  • Pre – shave, shaving or after-shave preparations, personal deodorants, bath preparations, perfumery, cosmetic or toilet preparations, room deodoriser
  • Perfumes and toilet waters
  • Beauty or make – up preparations
  • Fans, pumps, compressors
  • Lamp and light fitting
  • Primary cell and primary batteries
  • Sanitary ware and parts thereof of all kind
  • Articles of plastic, floor covering, baths, shower, sinks, washbasins, seats, sanitary ware of plastic
  • Slabs of marbles and granite
  • Goods of marble and granite such as tiles
  • Ceramic tiles of all kinds
  • Miscellaneous articles such as vacuum flasks, lighters,
  • Wrist watches, clocks, watch movement, watch cases, straps, parts
  • Article of apparel & clothing accessories of leather, guts, fur skin, artificial fur and other articles such as saddler and harness for any animal
  • Articles of cutlery, stoves, cookers and similar non electric domestic appliances
  • Razor and razor blades
  • Multi-functional printers, cartridges
  • Office or desk equipment
  • Door, windows and frames of aluminium.
  • Articles of plaster such as board, sheet,
  • Articles of cement or concrete or stone and artificial stone,
  • Articles of asphalt or slate, Articles of mica
  • Ceramic flooring blocks, pipes, conduit, pipe fitting
  • Wall paper and wall covering
  • Glass of all kinds and articles thereof such as mirror, safety glass, sheets, glassware
  • Electrical, electronic weighing machinery
  • Fire extinguishers and fire extinguishing charge
  • Fork lifts, lifting and handling equipment,
  • Bull dozers, excavators, loaders, road rollers,
  • Earth moving and levelling machinery,
  • Escalators,
  • Cooling towers, pressure vessels, reactors
  • Crankshaft for sewing machine, tailor’s dummies, bearing housings, gears and gearing; ball or roller screws; gaskets
  • Electrical apparatus for radio and television broadcasting
  • Sound recording or reproducing apparatus
  • Signalling, safety or traffic control equipment for transports
  • Physical exercise equipment, festival and carnival equipment, swings, shooting galleries, roundabouts, gymnastic and athletic equipment
  • All musical instruments and their parts.
  • Artificial flowers, foliage and artificial fruits
  • Explosive, anti-knocking preparation, fireworks
  • Cocoa butter, fat, oil powder,
  • Extract, essence ad concentrates of coffee, miscellaneous food preparations
  • Chocolates, Chewing gum / bubble gum
  • Malt extract and food preparations of flour, groats, meal, starch or malt extract
  • Waffles and wafers coated with chocolate or containing chocolate
  • Rubber tubes and miscellaneous articles of rubber
  • Goggles, binoculars, telescope,
  • Cinematographic cameras and projectors, image projector,
  • Microscope, specified laboratory equipment, specified scientific equipment such as for meteorology, hydrology, oceanography, geology
  • Solvent, thinners, hydraulic fluids, anti-freezing preparation

Services

Restaurants in hotel premises having room tariff of Rs 7500 and above, telecom services, IT services, branded garments and financial services, Outdoor catering

28% Tax Slab

The tax fitment committee have decided to keep only 50 luxuries and sin items to taxed at the highest tax bracket i.e. 28%. Let us look at some of these items which are as follows:

Goods

In total 50 luxury and sin products will be taxed at 28% which includes

  • Bidis,
  • molasses,
  • pan masala,
  • aerated water,
  • paint,
  • sunscreen,
  • wallpaper,
  • ceramic tiles,
  • water heater,
  • dishwasher,
  • weighing machine,
  • washing machine,
  • ATM,
  • vending machines,
  • vacuum cleaner,
  • automobiles,
  • motorcycles,
  • aircraft for personal use.

Services 

Private – run lotteries authorised by the states, race club betting, cinema will attract tax 28 per cent tax slab under GST.

Exemption from IGST / GST in certain specified cases

In the two – days GST meeting, which was held in 10th November, 2017, the council has recommended major relief in GST rates on certain Goods and Services.

In the meeting, the council has taken the 28% tax slab into reconsideration and decided to keep the highest 28% tax on luxury and sinful items. Hence, 177 items have been shifted to the 18% tax bracket.

Let’s discuss some of the other major recommendations of the council.

Exemption from IGST / GST in certain specified cases

The fitment committee has exempted IGST (Integrated Goods and Service Tax) on imports of life saving medicines supplied free of cost by overseas supplier for patients. This exemption has also been applied on imports of goods (except vehicles) in case the IGST is paid on the lease amount.

Also the exemption has been outstretched to the dairy cooperatives where milk is distributed through companies registered under the Companies Act, where this exemption was limited to production.

Other changes have also been made on some of the services which are as follows

  • Also the restaurants will now fall in the 5% tax bracket irrespective of being air conditioned or not. Food parcels will also attract 5% GST without ITC.
  • Hotels having room tariff of less than Rs 7500 per unit per day will also fall in GST of 5% without ITC.
  • Hotels having room tariff of Rs 7500 and above per unit per day will also fall in GST of 5% without ITC.
  • As before it has been fixed, the outdoor catering will continue to be at 18% tax bracket will full ITC

Rationalisation of certain exemption entries

Services that Fair Price Shops provide to the Central Government, State Government, or Union Territories by way of sale of basic necessities such as food grains, kerosene, sugar, edible oil etc has been taken into consideration and was rationalized in order to clear out the confusion regarding list of items and the category of recipients to whom the exemption is available.

Intellectual property is a supply of goods and services

  1. Permanent transfer of Intellectual Property other than Information Technology software attracts GST at the rate of 12%.
  2. Permanent transfer of Intellectual Property in respect of Information Technology software attracts GST at the rate of 18%.

GST Council reduces tax on 175 items from the highest tax slab i.e. 28%

On 23rd GST council meeting, the committee slashed rates on more than 175 items, which is considered to be biggest tax reductions since the new taxation system i.e. Goods and Service Tax (GST) came into being since July 1st.

The council today at 23rd GST council meeting which took place in Guwahati, Assam has decided to keep only 50 luxury and ‘Sin’ items such as tobacco in the highest tax slab i.e. 28%.  Also the council unanimously retained air conditioners, washing machines, paints, cement in the 28% tax bracket.

Bihar Deputy Chief Minister Sushil Modi said that the daily used products or mass consumptions such as shampoo, chocolate, beauty products and construction items such as marble and granite will be shifted from 28 per cent slab. However, this step will result in a revenue loss of Rs. 20 crore as the number in goods in the highest tax bracket is cut down to less than one – fourth.

There were 227 items in the 28 per cent slab. The fitment committee had recommended that it should be pruned to 62 items. But the GST Council has further pruned 12 more items.

He further added,

The council is set to approve sweeping changes including simpler procedures, a single return filing form for small firms and several changes to make composition scheme more attractive.

With the decision the AC and paint makers said that the “decision was expected”. Air condition maker Blue start told one of the source that

the GST council’s decision to retain the 28 percent tax slab was largely expected. Any reduction in rates would have kick started the market.

To the same source, paint maker Kansai Nerolac said that

the company will have no choice but to pass on the burden to the consumer if cost increase.
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