After facing a lot of criticism over high GST tax rates on a lot of items, the Central government finally decided to cut tax rates on more than 60 products resulting in slashing the price for them.
On Saturday, the GST council has taken this decision to cut the tax rates of products mostly used by the middle class such as washing machines, refrigerators and simplified complains norms for most businesses.
The new tax rates will be enforced from July 27.
This move is being seen as a step by the Modi government to pacify the resentment and anger of people who were upset with the high rates of the GST and its faulty implementation as the GST faulty implementation hit the business and the public.
The traders and businessmen have been complaining about the large number of returns that they have to file and the long list of goods in the 28 per cent bracket. The 28 percent was initially meant for a handful of luxury goods to be taxed at the highest rates.
Giving a relief to women, the government levied 0 per cent tax on sanitary napkins to promote menstrual hygiene among women. 0 percent tax has been demanded for a year but the government including Arun Jaitley resisting the demand by imposing 12 per cent tax.
The Congress attributed the changes in the tax rates to the electoral campaign the ruling party had launched.
After the council’s nine-hour-long meeting, Finance Minister Piyush Goyal, who is heading the GST council, said “The exercise is to ensure simplification and rationalisation of Goods and Services Tax, or GST and extend relief to the common man.”
According to Officials, 19 products such as refrigerators, washing machines, vacuum cleaners, paints, storage water heaters, food grinders, mixers and television sets up to 27 inches were removed from the 28 per cent tax slab. These have been included into 18 per cent slab.
A lot of other items including handbags, jewellery box, ornamental framed mirrors and handmade lamps will be put into 18 per cent slab removing them from the 12 per cent slab. Ethnol blended with petrol, footwear costing up to Rs 1,000 and fertilizer grade phosphoric acid will be put into 5 per cent slab.
Lithium ion batteries used to power mobiles phones and electric vehicles were moved out from 28 per cent to 18 per cent. Tax rate on fuel cell vehicles has been cut from 28 percent to 12.
As part of easing the compliance norms, the council has decided that business with annual turnover of up to Rs 5 crore would not have to file monthly returns anymore. Instead, They would have to file quarterly returns rather than monthly returns. However, they will have to pay tax on a monthly basis. Reportedly, above 90 per cent of registered businesses have a turnover of less than Rs 5 crore.
The hotel industry too has been given major relief as their tax rate would be based on the room tariff paid and not the published tariff.
If hotel room rent exceeds Rs 7,500, the GST will be 28 per cent and if it is between 2,500 to below Rs 7,500, the GST will be 18 per cent while the GST will 12 percent if the hotel room rents is Rs, 1000 and below Rs. 2,5000.