Buzz on GST rate cut in consumer goods gets louder

Buzz of a likely rate reduction of tax on home appliances is growing louder by the day following rate rationalisation of mass-use items on November 10.

It may be recalled that the government had slashed goods and services tax (GST) from 28 per cent to 18 per cent on products such as shampoos, deodorants, air freshners, washing powder and detergents a fortnight ago, keeping only 50 items, which includes consumer durables, in the 28 per cent bracket. Industry sources have told Business

Standard that the apex body, Consumer Electronics and Appliance Manufacturers Association (CEAMA), has since made strong representations to the government seeking rate cut of 18 per cent on home appliances.

CEAMA is understood to have pitched for a rate cut in four key categories— television (TV) sets, washing machines, air conditioners (ACs) and refrigerators. But, industry officials said a rate reduction in washing machines and refrigerators was likely on the cards at the next GST Council meeting in January-February next year. “The GST Council has time till early next year to decide on its next course of action and I am sure they will consider bringing down the tax rate, though air conditioners may not be part of this list,” B Thiagarajan, joint managing director, Blue Star, said. “There is a feeling in government quarters that ACs are luxury items and can therefore continue to be taxed at 28 per cent, while washing machines and refrigerators are a necessity,” he said. Close to two-thirds (or 67 per cent) of Indian households own TV sets, implying its penetration is high. Washing machines, refrigerators and ACs, on the other hand, have lower penetration, estimated at 12 per cent, 23 per cent and 5 per cent, respectively, according to data sourced from the industry.

Eric Braganza, president, Haier India, said a GST rate cut even in two categories would be a welcome move. “Even if the government decides on two durable categories, it would be a big leap forward,” he said.