Home >News >India >GST Council raises tax on mobile phones to 18%, MRO services to attract lower GST

New Delhi: Federal indirect tax body, the Goods and Services Tax (GST) Council, on Saturday decided to raise the tax rate on mobile handsets and specified components to fix a tax anomaly and lowered the tax rate on aircraft maintenance services, union finance minister Nirmala Sitharaman said here.

The Council decided to raise the GST rate on mobile handsets and specified components to 18% from 12% and lower the rate on aircraft maintenance, repair and overhaul (MRO) services to 5% from 18%, Sitharaman said after the Council meeting. All decisions will come into effect from 1 April, she said.

“It was decided by the Council that GST rate on mobile phones and specified parts which presently attract 12% will now be at 18%. For all other items, where inversion of duty structure is there, if there is a need to caliberate the tax rate to remove the duty inversion, we will examine it at a future meeting," the minister said. The other items on which the anomaly of inverted duty is present include footwear and fertilizers.

The minister also said the reduced GST rate on aircraft maintenance, repair and overhaul (MRO) services of 5% comes with full input tax credit. “We expect this change will assist in setting up MROs in India," said the minister.

The GST Council also decided to rationalize the tax rate on handmade and machine made matchsticks to 12%. At present, handmade match sticks are taxed at 5% and machine made ones are taxed at 18%, the minister said.

The Council also decided to give tax relief to taxpayers by amending the law. The interest payable for the delay in payment of GST will be charged on the net tax liability, not the gross tax liability with effect from 1 July, 2017. “The law will be amended with retrospective effect," said the minister.

The Council also reviewed the performance of GSTN, the IT backbone of the new indirect tax system and asked Infosys chairman Nandan Nilekani to fix all glitches by July 2020. Nilekani made a presentation at the Council. He has also been requested to give updates about improvements achieved in the system at the next three GST Council meetings.

Infosys made a detailed presentation and pressed for additional capacity and manpower. “The Council decided to enhance capacity and man power. He (Nandan Nilekani) thought it would require time till January 2021 for achieving various milestones. We have asked that all these have to be achieved by July 2020," the minister said.

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