Only 62 items likely to stay in 28% GST slab
About three-fourth items in the highest tax slab may move to lower brackets
Those planning to buy new furniture or refit electric switches might have to pay less after Friday, as the GST (goods and services tax) Council is likely to slash the indirect tax rates on these items at its meeting in Guwahati.
At present, these attract 28 per cent tax. As many as 165 such items could be moved to the 18 per cent category, with only 62 attracting the highest rate. Those retained in the highest category could include digital cameras, shaving creams, paints and varnishes, cigars, pan masala, chocolates, cosmetics, vacuum cleaners, refrigerators, washing machines, hair conditioning items, hair dyes, and marble and granite.
Some common items might also have their rates slashed from 18 per cent to 12 per cent, as demanded by states such as West Bengal.
At the Friday meeting, the Council will also have a presentation about the inclusion of real estate under the new indirect tax regime. Reducing the compliance burden on taxpayers would be a part of the exhaustive agenda.
If these suggestions of the “rate-fitment committee” are accepted, it would be the biggest rejig of rates since the GST roll-out on July 1 this year. Many common goods, which make up 75 per cent of the highest GST slab, will become cheaper.
“This will be a big relief for consumers and industry. It is to be seen if all states accept it,” said a government official on condition of anonymity.
Over 1,200 products and services were fitted into one of the four tax slabs — 5, 12, 18, and 28 per cent — before the roll-out.
A state government official said there would be some discussion on trimming of items in the 28 per cent slab. “Some rules need to be formulated on rate reduction. It can’t be done by the fitment committee alone. There needs to be some basis for that,” said the official.
Finance Minister Arun Jaitley had said at an event on Tuesday that some of the items should never have been in the 28 per cent slab.
The GST Council in the last three or four meetings has reduced rates on over 100 items, bringing them down either from 28 per cent to 18 per cent or from 18 per cent to 12 per cent.
A finance ministry official said initially items that had attracted 12.5 per cent central excise and 14.5 per cent valueadded tax (VAT) were “mechanically” put in the 28 per cent slab. Real estate: Conceptual discussion A presentation will be made on the inclusion of real estate in the GST. The approval of states is key as stamp duty and registration fees on property are the exclusive domain of states according to law and will need an amendment in the Indian constitution.
The Indian Stamp Duty Act, 1899, empowers states to collect and impose stamp duty. These vary across states, currently in the range of 3-10 per cent.
“The discussion on real estate will be at a very conceptual stage. Pros and cons will be discussed. After all, states will need to surrender their power to tax, even though revenue may not be a big concern,” said another government official.
Jaitley had said at Harvard University last month that bringing real estate under the GST will be taken up in the Council at its Guwahati meeting. “The one sector in India where maximum amount of tax evasion and cash generation takes place and which is still outside the GST is real estate. Some of the states have been pressing for it. I believe that there is a strong case to bring real estate into the GST,” he had said. “Some states want; some do not. There are two views. Therefore, by discussion, we would try to reach one view,” Jaitley had said in the US. Breather likely on complaince The Council might also allow quarterly return filing for all taxpayers, with monthly tax payment. This was suggested in a report prepared by the group of ministers (GoM), led by Assam Finance Minister Himanta Biswa Sarma.
In its last meeting, the Council had allowed quarterly return filing and tax payment for those with an annual turnover of up to ~1.5 crore.
“Keeping in mind the matching of returns, why not allow quarterly return filing for all taxpayers? If not all, at least for those with annual turnover of ~5 crore or ~10 crore should be allowed easier compliance through quarterly filing,” said the official. Besides, the composition scheme that allows a allowed. Allowing inter-state flat rate of tax and easier compliance sale under the composition may be eased further. scheme will also be taken up. The Council may increase the Additionally, a reduction in threshold for eligibility to ~1.5late filing fees to ~50 per day, 2-crore annual turnover, from against ~200 at present, may ~1 crore at the moment. This also be considered. For traders, will require an amendment in the report recommended a lower the law. “Amendment in the rate of 0.5 per cent in the case law will be needed, as the Act of a cumulative turnover of currently provides for a limit exempted and non-exempted of ~1 crore for the composition goods, and goods. 1 per cent fornonexempted scheme. We will not do it through an ordinance, but by Confederation of All India amendment, which may take Traders has also been pitching about two months,” said another for a reduction of items in the 28 official. per cent tax slab. In a letter to the
A flat 1 per cent rate for manufacturers finance minister, it has said that and restaurants will items related to construction be considered, against the current and infrastructure such as 2 per cent and 5 per cent, cement, builders hardware, plywood, respectively. For traders, a lower electrical fittings, marbles, rate of 0.5 per cent in the case beauty cosmetics, of a cumulative turnover of nutraceuticals, vitamin, mineral exempted and non-exempted and protein should be kept goods and 1 per cent for nonexempted out of 28 per cent. goods may be