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GST on ACs, colour TVs to be cut to 18 per cent

The Asian Age |

10 December 2018

Tax experts expect reduction in rates on some items besides easing of various procedures for trade and industry.

Moving closer to fewer rates in the new indirect tax regime, the GST council may shift more items such as bigger colour televisions, ACs and dishwashers to the 18 per cent slab, leaving only luxury and sin products in the peak rate of 28 per cent.

The council headed by finance minister Arun Jaitley is expected to take up the issue on December 22. With general elections just few months away, it’s being hoped that the government would give more relief to the middle class in terms of lower taxes on white consumer goods.

After a major rate cut in July, only 35 items, including colour TVs, ACs, passenger cars, cements and sin items like tobacco products, are now in the 28 per cent tax slab.

“As GST revenue has more or less stabilised, the government may consider reducing the rate structure from four to three. Since reduction in prices result in increase in consumption, the government is unlikely to have any major hit on revenue collection,” an official said.

Tax experts expect reduction in rates on some items besides easing of various procedures for trade and industry. “We hope eventually only tobacco products, cars and car parts would remain in the 28 per cent slab. Even cement could be shifted to the lower 18 per cent slab. But the only difficulty here is that it alone contributes about Rs 10,000 crore to the annual GST revenue,” said MS Mani, partner, Deloitte India.

The GST Council has been rationalising rates on most goods and services. Over the last one-and-a-half-year since the launch of the tax reform, the council has slashed rates on 191 items. Procedures have also been simplified to make the regime more taxpayer-friendly.

“We expect the government to further ease some of the procedures. As far as relief is concerned, we expect it to be industry-centric. For example, lower tax on paints could be aimed at providing relief to the struggling real estate sector,” said Amit Sarkar, partner and head (indirect tax) at private consultancy BDO India.

The last major rate cut was effected in July when the council decided to cut tax on a host of consumer items like refrigerators, perfumes, washing machines, electrical appliances and various handicraft products. The move was aimed at boosting consumer sentiment ahead of the festive season. The combined impact of rate cut on GST collection was estimated at Rs 10,000- 11,000 crore annually.