Tax rates on 22 items were decreased by the Federal indirect tax body, the Goods and Services Tax (GST) Council. Out of these 22 items 7 items belongs to the highest slab of 28%. Taxes on things with huge revenue entailments for the treasury, like cement plus automobile component parts, still stay in the 28% bracket.
The 6 items that have been moved from 28% to 18% are pulleys plus transmission shafts utilized in farming, monitors as well as TVs up to screen dimension of 32 inches, power banks, digital cameras, retreaded tyres, video camera recorders, and video game consoles. Spare parts of carriages for physically challenged people, which was previously taxed at 28%, now is reduced to 5%.
GST on film tickets which costs up to Rs.100 was decreased to 12% from 18% thus tickets more than Rs.100 will now be charged 18% GST against the previous 28%. Banks services to basic savings accounts as well as the Pradhan Mantri Jan-Dhan Yojana (PMJDY) were also relieved from GST.
The Council will be reviewing the 12% tax that is at on under-construction flats falling within the class of work contracts. Sale of finished flats will not attract GST because it is only a transfer of property. This has been put into effect because the 12% GST has been an encumbrance for home purchasers.
Further decreasing the number of items under the highest GST rate may as well encourage demand. For example automobiles in addition to a 28% GST rate, the class also have a compensation cess, relying on the size plus segment. A reduction in rates will decrease the prices and perhaps urge consumers to relax their wallet strings.
Apart from other determinations, the Council resolved to relieve frozen plus temporarily preserved veggies from GST. In addition the tax rate on 3rd party insurance premium of goods-conveying vehicles has been decreased from 18% to 12%.
The filing of returns according to the new GST system will be implemented from July 1, 2019. The Council also accorded to arrange a Centralized Advance Ruling Authority.
The decrease in the rates of the GST was imposed well before the national polls earlier this year. There has been strong political argument between the Prime Minister Narendra Modi-led NDA government as well as the opposition Congress party for the past few days over the reformed tax implementation.
Final say
With the most recent tax cuts, a mere 27 items comes in the purview of the 28% slab. When in July 2017, the GST was initially introduced; it had almost 228 classes of items. The reorganization of tax rates has pioneered the chance of meeting the 12% as well as 18% slabs to craft GST simpler.
The 28% bracket has always evidenced to be optically pre-judicious for the Modi administration. This is because the transparent mode of tax calculation in the latest indirect tax regimen fetched to the front all engrafted taxes that were not clear to the consumer in the previous regime.