GST Council meeting updates: Arun Jaitley says tax rate cut on 178 items applicable from 15 November

Tax rate cut part of ’transitional phase’, says Arun Jaitley

Responding to a question on affecting the idea of GST by introducing tax rate cut, the finance minister said, “We are not killing the spirit (of GST). It is a transitional phase.”

Penalty for late tax filing reduced

Finance and Revenue Secretary Hasmukh Adhia said, “The burden on people has become much less. Smaller people will file once in a quarter. Form 3B will be made more interactive in nature. The other important decision is regarding penalty on late filing. If there is a NIL report to be filed, then the fine for late filing will be reduced from Rs 200 per day to Rs 20 per day. And for other tax filers, the reduction will be from Rs 200 to Rs 50 per day.”

“States might not get revenue, which is why some penalty is there,” said Adhia.

No ITC benefit will be given to restaurants

Arun Jaitley said that the Input Tax Credit (ITC) benefit given to restaurants were meant to be passed on to the customers. However, since the Centre found that hotels were not doing so, “we had to decide that restaurant industry will not enjoy the benefit of ITC.”

He stressed that no ITC benefit will be given to restaurants, except in starred hotels. “Outdoor catering will be at 18 percent with ITC,” he said.

Jaitley confirms tax rate cut on 178 items

“In the last few meetings, as a part of our effort to rationalise GST structure, council has been reviewing rates from time to time. When the rates were originally fixed by sadding previous taxes, the principal of equivalence had been applied. Therefore each item of good was specifically fit into VAT category,” Jaitley said.

He added: “Having done the exercise, in the last 3 meetings, we have been systematically looking at the 28% tax bracket and ratronalising items from it to the lesser category. We were bringing them lower because optically. construction, cement and paint, the items within it, council decided to bring it to lower categories, thats why 178 items will be brought from 28 to 18 from 15 November.”

Manish Sisodia slams Centre over tax on essential items

The Delhi deputy chief minister tweeted: “In the meeting of the GST council voiced the tax reduction of 28% tax on all items except tobacco, cigarettes and other sin goods. Many states supported but Centre still did not reduce taxes on essential items such as paint, motor parts etc.”

Harish Rawat hails Rahul Gandhi for opposing high GST rates

West Bengal FM slams GST

“The tax losses in the last 3 months have been phenomenal for many states. The aggregate loss is Rs 60,000 crore at the Central level, and Rs 30,000 cr at the state level,” Amit Mitra, finance minister of West Bengal, told reporters on Friday.

5% tax on all restaurants except on 5-star hotels

All restaurants may be moved to 5 percent tax bracket without input tax credit, CNBC TV-18 reported.

Make it simpler

Beyond rates, what has made GST a painful experience for small traders is the complexity of the tax filing process and technical glitches that often arises. Multiple filings (three different forms), different tax rates on different raw materials that goes into one product and frequent changes in rules add to the confusion making GST a complex affair for businesses and even for ministers.

On Wednesday, Madhya Pradesh Food and Civil Supplies minister, Om Prakash Dhurve said that he has still not understood the new tax regime. The government and GST council will have to simplify the tax filing process to increase compliance, something GST originally promised. More importantly, there needs to be policy consistency. Frequent changes in rules governing the GST structure will only add to the confusion.

Rahul Gandhi lists ‘suggestions’ for GST

Rahul Gandhi slams BJP over GST 

Moving more items to 18% slab a win-win move

After four months of GST rollout, the biggest overhaul on GST rates has come now in the form of major reduction in the rate structure. Clearly, there was pressure on the GST council and Narendra Modi government to make GST rates more consumer friendly to encourage its acceptance, particularly among small traders. As against 227 items earlier, only 50 items now remain in the 28 per cent slab which are mostly luxury items, while the rest have been brought down to 18 percent slab. Already majority of the goods were in the 18 percent slab.

This move is good news for both the industry and the consumer since the lower rate will ease their tax burden and encourage more people to pay tax. More importantly, moving more items to the 18 percent bracket effectively makes this as the key GST rate, something Opposition parties have been pitching for long.

Moving more items to 18% slab a win-win move

After four months of GST rollout, the biggest overhaul on GST rates has come now in the form of major reduction in the rate structure. Clearly, there was pressure on the GST council and Narendra Modi government to make GST rates more consumer friendly to encourage its acceptance, particularly among small traders. As against 227 items earlier, only 50 items now remain in the 28 per cent slab which are mostly luxury items, while the rest have been brought down to 18 percent slab. Already majority of the goods were in the 18 percent slab.

This move is good news for both the industry and the consumer since the lower rate will ease their tax burden and encourage more people to pay tax. More importantly, moving more items to the 18 percent bracket effectively makes this as the key GST rate, something Opposition parties have been pitching for long.

Delhi joined the growing chorus of opposition against the highest 28 percent goods and services tax (GST) rate, saying a high rate would encourage black marketing. The Congress-ruled states have been demanding rationalisation of GST rates to bring down the peak tax rate from current 28 percent.

Delhi deputy chief minister Manish Sisodia, who is in Guwahati to attend the crucial meeting of the GST Council, said lower tax rates should have been implemented from 1 July, when the GST was rolled out.

Deloitte India’s MS Mani welcomes rate cut

“The recalibration of rates on several products from 28% to 18% is a welcome move which will significantly perk up the GST sentiment. The short term revenue losses will be more than made up through a wider taxbase and improved compliance “ MS Mani, Partner GST, Deloitte India tells Firstpost.

Yashwant Sinha seeks Arun Jaitley’s resignation, says  finance minister did not apply his mind

Senior Bhartiya Janata Party (BJP) leader Yashwant Sinha on Friday again mounted an attack against Finance minister Arun Jaitley accusing him of not applying mind while implementing Goods and Services Tax (GST) and demanded his resignation.

Extending the verbal duel, he took a jibe at Arun Jaitley saying, “those who says I am seeking job at 80 must know I never presented budget sitting in the parliament.”

He demanded a committee be set up under the chairmanship of Vijay Kelkar to look into various debatable aspects of GST.

He was speaking in a symposium organized by ruling JDU dissident leader Uday Narayan Chaudhary in Patna. Himself a former finance minister, Yashwant Sinha criticised  the union government for claiming various achievements after demonetization.

“There is no sign of end of black money. Sometimes people say demonetization reduced stone pelting in Jammu & Kashmir. They should refrain claiming such achievements,” He said.

Yashwant Sinha criticised the way GST was rolled out in hurry saying, “Present Finance minister did not apply his mind. If had it been the case then there was no need to change the tax structure so frequently. It means the system is not working.

He also attacked Bihar chief minister Nitish Kumar for extending reservation in outsourced jobs saying the rule was applicable since 1993 and the state government has done nothing new in this regard.

Yashwant challenged the CM to pass a bill from the assembly for reservation in private sector and send it to the center.

Sinha demanded a national commission for deprived among OBC to determine their needs. He called on Uday Narayan Chaudhary to start agitation on street against the wrongdoings of the state government. 

— Alok Kumar, Executive Editor, News18

GST rate on mass consumption items cut to 18%

The GST Council on Friday decided to reduce tax rate on a wide range of mass use items – from chewing gums to detergents — to 18 percent from current 28 percent, Bihar Deputy Chief Minister Sushil Kumar Modi said.    

The all-powerful council pruned the list of items attracting the top 28 percent tax rate to just 50 from 227 previously, Modi told reporters in Guwahati.

In effect, the council, in its 23rd meet today, cut rates on 177 goods.

Facing intense heat from opposition-ruled states over keeping mass used goods in the 28 percent bracket which was meant for luxury and de-merit goods, the Council pruned the list to 50 as against 62 that was recommended by its fitment committee.

The Goods and Services Tax (GST), implemented “from July 1, has five tax slabs of 0 percent, 5 percent, 12 percent, 18 percent and 28 percent.

“There were 227 items in the 28 percent slab. The fitment committee had recommended that it should be pruned to 62 items. But the GST Council has further pruned 12 more items,” Modi said.

He said all types of chewing gum, chocolates, preparation for facial make-up, shaving and after-shave items, shampoo deodorants, washing powder detergent and granite and marble will attract lower 18 percent tax rate. 

“There was unanimity that in 28 percent category there should be only sin and demerit goods. So, today the GST Council took a historic decision, that in the 28 percent slab there will be only 50 items and the remaining items have been brought down to 18 percent,” he said.

Paints and cement have been retained in the 28 percent tax bracket, he said.

“Luxury goods like washing machines and air conditioners have been retained at 28 percent.”

The decision taken by the GST Council will have a revenue implication of Rs 20,000 crore annually.

“There is a consensus that slowly 28 percent slab should be brought to 18 percent. But it will take some time because it has a big revenue implication,” he said.

PTI

50 items to remain in 28% bracket

GST Council decides to keep only 50 items, mostly demerit, sin and luxury goods in top 28% bracket. Lower 18% GST will be levied on chewing gums, chocolates, after shave, deodorant, washing power, detergent, marble: Bihar deputy chief minister Sushil Modi (PTI)