Home / News / India /  GST Council to consider rate change on only a handful of items in meet next week

New Delhi: The GST Council, which is scheduled to meet next week, will take up changes in tax rates on only a handful of items where the fitment panel has recommended a revision, as per the agenda document reviewed by Mint.

The rates panel rejected demands for good and services tax (GST) reduction on 113 items including molasses, cut fruit and vegetables in syrup, walnuts, medical devices, imitation zari, rooftop solar panels, handlooms, etc.

The GST Council is meeting 28 June-29 June in Chandigarh. It had last met in December.

The fitment panel has recommended a hike in rate on cut and polished diamonds to 1.5% from 0.25%, but has left the final decision for the Group of Ministers (GoM) on rate rationalisation to examine. The rate fitment panel comprising officers from the Centre and states has argued that reduced rate on cut and polished diamonds was causing duty inversion and blockage of input tax credit or ITC for the gems and jewellery industry.

The fitment panel proposed reducing GST rates to 5% from the current 12% on ostomy appliances including the waterproof pouch for collecting waste from the body, used by patients suffering from ulcerative colitis, Crohn’s disease, diverticulitis, etc.

It has also recommended a uniform rate of 5% for orthopaedic implants (trauma, spine, and arthroplasty implants in body); orthoses (splints, braces, belts & calipers); prostheses (artificial limbs). The GST rate of 5% for specified items and 12% otherwise, causes confusion, the fitment panel noted. Hearing aids will continue to attract nil rate.

In what could boost defence supplies, the fitment committee has recommended that the basic customs duty and Integrated GST exemption on specified defence items may be extended to imports by private entities provided that the end user is the defence forces. 

Currently, the exemptions from BCD and IGST are only available on imports made by the armed forces and the DPSUs/PSUs for defence items. However, the panel looking at rates noted that allowing exemption to imports by the private sector, if the end-user is the defence forces, may ease the availability of critical defence-related items. Besides, the concession is only for a limited duration, of up to 30 June, 2024, and is subject to certification of imports by the Ministry of Defence.

The GST rate on tetra packs will likely go up from 12% to 18% to bring it on par with other packaging items like cartons, plastic bottles, and sachets that attract 18% GST,

The fitment panel has also clarified that sewage treated water will continue to attract nil rate, amid confusion that it be clubbed with purified premium commercial water attracting a 12% GST.

Amid contradictory rulings by different authorities of advance rulings on electric vehicles, the fitment panel has recommended that a suitable clarification be issued that electric vehicle, whether fitted or not with a battery pack, are eligible for the concessional 5% GST rate.

The demand for GST rate reduction on walnut from 5% to nil has also been rejected with the panel suggesting that there was no merit in the representation as almonds other dried fruits other than walnuts and cashews attract 12% GST.

It also turned down a request for a reduction in GST rate on pickles and chutneys from 12% to 5% and that for ready-to-eat, or ready-to-cook foods from 18% to 5%.

Dilasha Seth
" Dilasha Seth is a journalist reporting on macroeconomic policy for the last 11 years. She writes extensively on issues including international trade, macroeconomic data, fiscal policy, and taxation. At Mint, she reports on trade deals that India is signing besides key policy decisions of the Ministry of Finance. She closely tracked and covered the transition to the goods and services tax (GST) regime in 2017 and also writes on direct tax-related issues. In the past, she has worked with Business Standard and The Economic Times. She is based in Bangalore."
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