With their removal from the GST regimes’s highest 28 percent tax bracket by the GST Council on Saturday, computer monitors, TV screens, video games, lithium-ion power banks, retreaded tyres, wheelchairs and cinema tickets are among products and services set to get cheaper.
Besides, a major decision is was that services supplied by banks to basic savings bank deposit accounts and holders of Jan Dhan accounts will be exempt from GST.
A total of 17 items and six services have been reduced which will result in a revenue impact of Rs 5,500 crore for the full fiscal, Union Finance Minister Arun Jaitley said, briefing reporters here after the 31st meeting of the Council chaired by him.
“There are 28 items left in the 28 per cent bracket if we include ‘luxury and sin items’, and items used by economically well-off sections of the society, only one item of common man’s usage –
cement – remains in the bracket,” Jaitley said.
Second-hand tyres, video games, monitors and television screens up to 32 inches, and lithium battery power banks will now attract 18 percent GST…the GST on wheelchair accessories has been brought down to 5 per cent from the existing 28, which will also allow the payment of input tax credit that is not possible with zero tax,” Jaitley said.
Air conditioners and dishwashers have been left untouched at the highest rate because these are not items of common use in India, he said.
Nearly 1,250 goods and services have been categorised under the four tax slabs of 5, 12, 18 and 28 per cent under the GST regime.
The GST Council, however, postponed a decision to the next meeting in January on five issues – taxation of residential properties, extending the composition scheme for small businesses to small service providers, the tax rate on lotteries, raising the exemption threshold for MSMEs and on the tax to provide relief in natural calamities.
Cutting the rates on cement and automobile parts would mean a combined revenue loss of Rs 33,000 crore, which the Council felt is “too steep” to be considered at this juncture, Jaitley said.
While the GST on third party motor vehicle insurance has been cut from 18 to 12 percent, cinema tickets up to Rs 100 have also been granted a similar reduction. Movie tickets costing more that Rs 100 have been brought down from 28 to 18 percent. GST on solar power generating plants and renewable energy items have also been reduced, he added.
The Council also decided to form a seven-member Group of Ministers (GoM) to study anomalies in tax collection in some of the States which showed wide deviation from what was expected in terms of shortfall.
“The Council has approved the proposal to form a seven-member GoM to study the revenue trend, including analysing reasons for structural patterns affecting revenue collection in some of the States,” Jaitley said.
He noted that the average monthly collection of GST has fallen short of the target which had been set at substantially high level of 14 percent increase compounded annually.
“In many States there is improvement (collection), but we have a very stiff target. From the base year 2015-16, three increases of 14 per cent, this year’s target would be nearly 50 per cent above the base year. Falling short of the target by 5-10 per cent, is because the target is very stiff,” the Union Finance Minister added.
It maybe remembered Prime Minister Narendra Modi had recently promised to bring 99 per cent the goods under the 18 percent or lower GST slab.