As expected, the GST (Goods and Service Tax) Council in its 31st meeting today agreed to reduce the tax for several items. Earlier this week, Prime Minister Modi indicated that the 28 percent tax slab would be limited to only select commodities like luxury products.
The outcome of the 31st GST Council meeting has been as follows:
- Taxes on all items except 13 auto parts, cement have been reduced.
- The new rates will be effective from 1 January.
- Only 34 items that are luxury or sin goods will be taxed at 18 percent or more, as they will be removed from rate rationalization.
- Tax on lithium-ion battery based power banks, monitors and other screens up to 32 inches, gear boxes, retreated tyres, VCR, video games and other sports related items will be reduced to 18 percent from 28 percent.
- Bank services for a basic savings account and Jan Dhan accounts will be exempt from GST.
- State governments will be compensated with around Rs 60,000 crore for the losses incurred from GST.
- A Group of Ministers will be created, and it will take expert opinion from NIPFP as some states are not showing improvement in revenues.
- A group of seven ministers will be constituted to look into revenue loss to states and other structural problems of GST.
- Tax on cinema tickets up to Rs 100 brought down from 18 percent to 12 percent.
- Cinema tickets above Rs 100 will be charged with 18 percent GST.
- GST on special flights for pilgrims reduced to 5 percent for economy class and 12 percent for business class.
- A composition scheme will be designed for small service suppliers.
- The new return filing system will be started from 1 April on a trial basis and implemented mandatorily from 1 July.
- Taxation issues on residential properties to be discussed in the next meeting.
- The total losses from the tax rate rationalisation will be Rs 5,500 crore for the whole financial year.