GST Council revises rates of over 85 consumer centric items

New Delhi, 22 July 2018 [Fik/News Sources]: The Goods and Services Tax (GST) Council in its 28th meeting Saturday approved rate reductions for 88 consumer-centric items including cosmetics, refrigerators, washing machines, approving also the widely demanded tax exemption on sanitary napkins.

The tax was also cut to zero for marble and stone idols, rakhis, and sal leaves.

The Council announced quarterly return-filing and monthly tax payments for businesses with annual turnover of up to Rs 5 crore as against the current threshold of Rs 1.5 crore, a move that is expected to benefit 93 per cent of registered GST taxpayers.

“The exercise was to ensure simplification and rationalization of GST and extend relief to the common man,” Goyal told reporters in New Delhi on Saturday evening.

"The tax rate on ethanol blended with petrol, footwear costing up to 1,000 rupees and fertilizer grade phosphoric acid has been reduced to 5 from existing 12 percent", Goyal said.

In a boost to mobile phone manufacturing and electric vehicles, the tax rate on lithium ion batteries was cut from 28 percent to 18 percent. Other items for which the GST rate has been cut from 28% to 18% include vacuum cleaners, domestic electrical appliances such as water heaters, hair shavers/dryers, paints and varnishes, water coolers, scents, perfumes, cosmetics and refrigerators.

GST has also been reduced from 28% to 18% on special purpose motor vehicles. e.g., crane lorries, fire fighting vehicle, concrete mixer lorries, spraying lorries, works trucks [self-propelled, not fitted with lifting or handling equipment] of the type used in factories, warehouses, dock areas or airports for short transport of goods, trailers and semi-trailers, and miscellaneous articles such as scent sprays and similar toilet sprays, powder-puffs and pads for the application of cosmetics or toilet preparations.

The revised tax rates will be applicable from July 27. “The decision taken today will increase compliance and the revenue impact on total tax collections will be marginal,” said Goyal.

Tax experts welcomed the rate cuts and simplification of the returns-filing process, but pointed out that the exemption for sanitary napkins may not lead to lower prices as manufacturers won’t be able to claim input tax credit. When asked, Goyal said calculations showed that input tax credit on sanitary napkins was about 3-4 per cent, and the government would ensure a lower price for the end product.

Revenue collections from GST are a crucial pillar of government’s plan to cut its fiscal deficit in the current year. India’s GST collection for the fiscal 2017/18 was 98 percent of the budgeted target.