GST Cuts to be Pragmatic and Helpful to Some Industries
The GST council has recently brought down tax rates on a number of goods and services. Hoping for better consumption growth and compliance for the coming year, the government has taken over some major changes in the GST tax policy.
The proposed rate cuts deem to un-touch industry expectations, as major rates on priority goods like cement and auto products being in the highest tax bracket of 28 % left unconsidered in the policy.
In some states, GST figures showed a declined trend when compared to expected estimates. While the rapid amendments got no effective support from the industry, the government tasked a 7 membered group of ministers (GoM) to merit the situation with possible rate cuts.
An element of the political influence was also imaged in the proposed GST rates, as GST on walking sticks was reduced to 5% from 12% to node the priority vote bank i.e. senior citizens for upcoming elections in 2019. Also, taxes on movie tickets and electronics like televisions with screen size up to 32 inches were also declined.
Top picks of the last GST council meet:
-> The 28% slab seems to end soon. At present it includes luxuries, auto parts, cement, ACs, and other sin goods. Finance Minister Arun Jailtely said ‘the 28% slab is now a dying slab and with the coming sessions and transformation of GST slabs it shall close completely .
-> He further stated –
to direct the future GST roadmap with a single GST slab instead of two 12% and 18% slabs and;
to take up the nation with only a three slabbed GST module being 0%, 5% and a standard rate slab with sin and luxury goods as exception.
-> To adjust goods of common use like cement and auto parts to be somewhere between 12% and 18% from 28%, i.e. the new slab to be proposed in the near future.
->A comprehensive decision was undertaken on taxation of solar power plants, renewable energy plants and other devices/parts used in their formation, putting up an example as whenever a service contract is put in front by any engineering servicing company to form an energy plant, 70% of its gross value will be charged under 5% slab and rest shall be treated as other services.
-> Some tax benefits were also given to the film industry, with reduction of GST from 28% to 18% on purchase of movie tickets above Rs 100 and 18% to 12% for tickets below Rs 100.
-> For the auto industry, goods those falling in the HSN Code 8483 category including gears, gearboxes, shafts etc. was decided to put in GST slab of 18% than from 28% earlier imposed.
While the proposed cuts didn’t put up to expectations, the industry is looking for some more cuts in the coming interim budget session of government to be held in February 2019.
The overall shortfall in the revenue made the government take up a bolder rationale for the GST rate cut, which in the coming sessions of GST council would be taken in a broader aspects, the official sources say.
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