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GST burden on 178 items lessened; Lifesaving medicine imports exempted from IGST

Friday November 10, 2017 10:28 PM, & Agencies

GST Council Meet Today
[Union Minister for Finance and Corporate Affairs Arun Jaitley addressing a press conference after the 23rd GST Council meeting, at Guwahati on November 10, 2017. Minister of State for Finance Shiv Pratap Shukla is also seen.]

The Goods and Services Tax Council agreed on Friday to slash the price of dozens of mass consumption items such as detergent and shampoo as well as make eating out cheaper.

The decision taken at GST Council's meeting held at Guwahati, Assam is expected to help ease the pressure the government faces over economic disruptions from the rollout of the new tax and last year’s scrapping of high-value banknotes.

The council recommended that the government prune by nearly three-quarters the number of items under the highest 28% slab, which also include chocolates, beauty products, wigs and wrist watches.

Finance minister Arun Jaitley announced a uniform tax of 5% on all restaurants, down from 18% (air-conditioned restaurants) and 12% (non-AC). He said input tax credit — a facility to set off tax paid on inputs with final tax— will be withdrawn from these restaurants as they did not pass on the benefit to customers.

Restaurants in starred hotels that charge Rs 7,500 or more per day room tariff will continue to levy 18% GST with the ITC benefit but those in hotels charging less than Rs 7,500 room tariff will charge 5% GST but will not get ITC.

Making things cheaper will set government revenues back by Rs 20,000 crore, council member Sushil Modi told reporters.

Only 50 out of 228 items have been retained in the 28% rate slab. Additionally, the 18% slab has also been pruned to 12% and 5%.

“We have rationalized certain items from the 28% to the 18% or even less. Optically, there are few items that shouldn’t be at 28% that were there earlier. There were 228 items in the 28% slab, 178 out of which have been shifted out of the slab.

"Cess items such as luxury items, sin goods, white goods, auto parts, cement, paint among others are the only ones remain in 28% category,” said finance minister Arun Jaitley.

The GST Council also announced exemption from IGST on imports of lifesaving medicine supplied free of cost by overseas supplier for patients, subject to certification by DGHS of Centre or State and certain other conditions and exemption from IGST on imports of goods (other than motor vehicles) under a lease agreement if IGST is paid on the lease amount.

To extend IGST exemption presently applicable to skimmed milk powder or concentrated milk, when supplied to distinct person under section 25(4) for use in production of milk for distribution through dairy cooperatives to where such milk is distributed through companies registered under the Companies Act.

The council also decided to exempt from IGST on imports of specified goods by a sports person of outstanding eminence, subject to specified conditions and exemption from GST on specified goods, such as scientific or technical instruments, software, prototype supplied to public funded research institution or a university or IISc, or IITs or NIT.

The new rates will be applicable from November 15, 2017.

The GST council has also reviewed the returns filing cycle and all taxpayers will now need to file only one set of returns in the current year.

The latest changes come amid complaints by traders and small businessmen who say GST has increased their tax and administrative burden.

Opposition parties also claimed that the government had to bite the bullet as they had suggested from Day One that 18% should be the maximum tax on goods and services, except a few items like alcohol and tobacco products.

“India’s FM did not apply mind while implementing GST", senior BJP leader and former finance minister Yashwant Sinha said. Sinha was in Patna addressing a symposium organised by JDU dissident Uday Narayan Chaudhary.

Congress Vice-President Rahul Gandhi posted a comment on Twitter: “We will not allow BJP to impose a Gabbar Singh Tax on India. They cannot break the back of the small and medium businesses, crush the informal sector and destroy millions of jobs.”

Delhi deputy CM and finance minister Manish Sisodia posted a tweet saying GST on many essential commodities like paints and motor parts continue to be at 28%, despite opposition demand to reduce it.

“BJP government is having to swallow its ego,” he added.

West Bengal Finance Minister Amit Mitra said opposition parties had "fought and brought down the tax rates on different items but they (the government) did not agree totally and a few essential items are still in the higher slab of 28 per cent."

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