The Goods and Services Tax Council on Sunday decided to reduce tax rates on 66 items including cashew nuts, packaged foods such as sauces and pickles, agarbatti, insulin, school bags, children's colouring books, cutlery, and some tractor components. The Council has also reduced the tax rate on cinema tickets costing ₹100 or less.
Finance Minister Arun Jaitley, while addressing the media following the conclusion of the one-day meeting in the capital, said that the tax rate on cashew nuts has been reduced to 5% from 12%, while the rate on sauces, pickles, mustard sauce, and other similar packaged foods has been reduced to 12% from the 18% earlier set.
The rate on agarbatti has been reduced to 5% from 12%, and the same has been done for insulin. The rate on children’s colouring books has been reduced to nil, while that on school bag has been reduced to 18% from 28%. The rate on components that can only be used in tractors has been reduced to 18% from 28%.
The GST Council will meet again on June 18 to discuss any pending issues, including the e-way bill rules and the rates on lotteries, Mr Jaitley said, adding that the accounting and records rules were approved by the Council during Sunday’s meeting.
The Council also decided to increase the limit under the composition scheme from ₹50 lakh to ₹75 lakh. The compensation scheme was introduced for small business that would struggle to comply with the various requirements of GST.
Those opting for the scheme will have to pay tax at the rate of 1% for the trading community, 2% for those engaged in manufacturing, and 5% for restaurants, Mr. Jaitley said.
“There are two objectives behind this move,” Mr. Jaitley said. “The first is to maintain revenue neutrality, and this also eases the burden on SMEs and small businesses in trading, manufacturing, and the restaurant business because they are mass job creators.”
“This should mean that a significant number of SME sector players should benefit from not having to meet with detailed compliances under GST and also having a less financial burden, on account of GST,” Mahesh Jaising, Partner, Indirect Tax, BMR & Associates said.
Revised Rates
“We have received 133 representations asking us to reconsider rates, and we have revised downwards the rates on 66 items,” the Finance Minister said, adding that the complete list would be released soon.
“It has also been decided that for cinema tickets costing ₹100 or less, the tax rate has been reduced to 18%, and for tickets costing above ₹100, the tax will remain at 28%,” Mr Jaitley added.
The Council, however, has decided to retain the 12% tax rate on sanitary pads.
“The reduction of GST rates proposed on several items by the GST Council indicates that many consumer items may see a price reduction or at least equivalence of prices after GST is introduced,” MS Mani, Senior Director at Deloitte Haskins & Sells said. “This will avoid any fear of an inflationary spiral due to GST and may actually see prices stabilizing and benefit consumers.”
Workers in the leather, diamond working, and textile industries will be taxed at 5% instead of the 18% set earlier.
Click here for the full list of GST rates for goods
Click here for the full list of GST Compensation Cess Rates for different supplies
