GST Council Seeks States View On Hiking Rates Of 143 Items. Read Details HERE

At present, GST has four slabs of 5, 12, 18 and 28 per cent. Besides, gold and gold jewellery attract a 3 per cent tax. There is also an exempt list of items like unbranded and unpacked food items which do not attract the levy.

New Delhi: The GST Council has sought views of states on hiking rates on 143 items as part of a proposed rate rationalisation under the Goods and Services Tax (GST) regime to bolster revenues. As per a report by Indian Express, Of these 143 items, the governing body for the indirect tax regime has proposed to shift 92 per cent items from the 18 per cent tax slab to the top 28 per cent slab.

A lot of the proposed rate changes will reportedly mark the reversal of the rate cut decisions taken by the Council in November 2017 and December 2018, in the run-up to the 2019 general elections.

What Are These Items?

According to sources quoted by Indian Express in the report, these items include papad, power banks, suitcases, gur (jaggery), handbags, perfumes/deodorants, watches, colour TV sets (below 32 inches), chocolates, walnuts, custard powder, chewing gums, non-alcoholic beverages, washbasins, ceramic sinks, goggles, frames for spectacles/goggles and apparel and clothing accessories of leather.

In the November 2017 meeting held in Guwahati, the GST council had reduced the rates for items such as perfumes, leather apparel and accessories, chocolates, cocoa powder, beauty or make-up preparations, fireworks, floor coverings of plastics, lamps, sound recording apparatus, and armoured tanks. Meanwhile, GST rates for items such as colour TV sets and monitors (below 32 inches), digital and video camera recorders, and power banks were reduced in the December 2018 meeting. Rates of these items are now proposed to be hiked again.

Similarly, GST rates for items such as papad and gur (jaggery) are likely to be moved from zero to the 5 per cent tax slab, according to the report. Leather apparel and accessories, razors, wristwatches, pre-shave/after-shave preparations, perfumes, dental floss,  waffles, chocolates, cocoa powder, extracts and concentrates of coffee, handbags/shopping bags, non-alcoholic beverages, along with house construction items of ceramic sinks, washbasins, plywood, doors, windows, electrical apparatus (switches, sockets etc) may also see a hike in  GST rate to 28 per cent from 18 per cent.

GST rate for walnuts may also get increased to 12 per cent from 5 per cent, for custard powder to 18 per cent from 5 per cent and for table and kitchenware of wood to 18 per cent from 12 per cent.

Why GST Council Is Revising The Revenue Slabs?

With most states on board to raise revenue so that they do not have to depend on the Centre for compensation, the Goods and Services Tax Council (GST) Council, in its upcoming meeting next month, is likely to take up a proposal to do away with the 5 per cent slab by moving.

At present, GST has four slabs of 5, 12, 18 and 28 per cent. Besides, gold and gold jewellery attract a 3 per cent tax. There is also an exempt list of items like unbranded and unpacked food items which do not attract the levy.

With the GST compensation regime coming to an end in June, it is imperative that states become self-sufficient and not depend on the Centre for bridging the revenue gap in GST collection.

The Council had last year set up a panel of state ministers, headed by Karnataka Chief Minister Basavaraj Bommai, to suggest ways to augment revenue by rationalising tax rates and correcting anomalies in the tax structure. The group of ministers is likely to finalise its recommendations by early next month, which will be placed before the Council in its next meeting, likely by mid-May, for a final decision.

At the time of GST implementation on July 1, 2017, the Centre had agreed to compensate states for five years till June 2022 and protect their revenue at 14 per cent per annum over the base year revenue of 2015-16.