Rates of over 200 daily-use items are expected to come down
The GST Council headed by Finance Minister Arun Jaitley is set to meet in Gowahati on November 10 and could lower tax rates on many common use goods. The two-day meeting got underway today to review the progress of the Goods and Services Tax (GST) three months after it was rolled out. The GST Council is also expected to offer more relief to small and medium enterprises (SMEs) in terms of compliance burden. Mr Jaitley had earlier this week hinted at pruning the list of items in the highest GST tax bracket of 28 per cent. "We have been gradually bringing them down. The whole idea is, as your revenue collections neutralises we must prune it," he had said.
Bihar Deputy Chief Minister Sushil Kumar Modi, who heads the panel on the Goods and Services Tax Network (GSTN), said the rates on over 200 daily-use items are expected to come down from 28 per cent to 18 per cent at the GST Council meet tomorrow.
One of the items which are expected to be taxed lower is handmade furniture. Wooden furniture is mostly handmade by unorganised sector artisans and there have been demands for lowering tax incidence on them.
Some items of plastic attract an 18 per cent GST but goods such as shower baths, sinks, wash basins, bidets, lavatory pans, seats/covers, flushing cisterns and similar sanitary ware of plastics attract a 28 per cent levy.
A panel, headed by Assam Finance Minister Himanta Biswa Sarma, had suggested doing away with the tax rate distinction between AC and non-AC restaurants not covered under the composition scheme. It had proposed a uniform tax rate of 12 per cent. Currently, GST is levied at 12 per cent on non-AC restaurants, while it is 18 per cent for air-conditioned ones.
The panel also recommended lowering tax rates for manufacturers and restaurants under the composition scheme to 1 per cent. At present, while manufacturers pay GST at 2 per cent, the rate for restaurants is 5 per cent. Traders currently pay 1 per cent.
The panel is also looking to rationalise tax rate in sectors where the total incidence of taxation has gone up because the goods were earlier either exempt from excise or attracted lower VAT rates in the previous indirect tax regime.
To ease compliance burden of taxpayers, the Council is also going to review the requirement of filing three returns every month under the GST set-up.
The first three months of GST rollout have earned a total revenue of around Rs 2.78 lakh crore for the exchequer.
Prime Minister Narendra Modi said if there is consensus at the next GST council meeting due over November 9 to November 10, the government would take the necessary steps to help traders and strengthen the country's economy.