New Delhi: The GST Council may consider lowering tax rates on a host of items, such as handmade furniture, plastic products and daily use items like shampoo, and simplify return filing rules, in its meeting on 10 November.
The GST Council, headed by finance minister Arun Jaitley, is scheduled to meet on 10 November to consider lowering of the 28% GST rate on certain common use items, government officials said.
Mint first reported this on 1 November.
In further relief to small and medium enterprises (SMEs), GST Council is likely 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. The GST Council has been meeting every month since the GST rollout on 1 July. The meetings have resulted in an array of changes to ease compliance burden on businesses as well as provided relief to consumers.
“A rationalisation of items in the 28% tax bracket is expected. Most of the daily use items could be lowered to 18%. Also tax rate on items like furniture, electric switches, plastic pipes could be relooked," an official said.
All types of furniture attract 28% tax under GST. Wooden furniture is handmade by the unorganized sector artisans and is mostly used by middle-class families. There have been demands for lowering tax incidence on them. Also, some items of plastic attract 18% GST but goods like shower baths, sinks, wash basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitaryware of plastics attract 28% levy. There is a need for rationalization of tax rates on these items, officials said.
The plastic manufacturers in their representation to the revenue department had said that 80% of the industry is in MSME category. Besides, the GST rate on weighing machines, compressors may also be rationalised to 18% from 28%.
Officials said 90% of the manufacturers are from the SME sector who, in the pre-GST era, were exempt from excise duty on manufactured value of less than Rs1.5 crore. Hence, such machines only attracted VAT of 14.5%. With regard to compressors, the total pre-GST incidence was 17.5% (12.5% excise duty and 5% VAT), they said stressing on need to rationalise the tax incidence.
The GST council, which comprises of representatives of all states, have already rationalised tax rates for over 100 items. The council has last month approved an approach paper to be followed by the fitment committee while deciding on future rate revisions.
Under GST, various goods and services have been bracketed in 5%, 12%, 18% and 28%. GST has subsumed over a dozen taxes, including excise, service tax and VAT, and transformed India into a single market.