GST on more than 50 goods slashed; sanitary napkins exempt

Sanjeev Sharma
Tribune News Service
New Delhi, July 21

In the run up to the general elections next year, the Goods and Services Tax (GST) Council comprising the Centre and states on Saturday brought relief to the middle class consumers by reducing the rates on more than 50 goods and more than 100 items if concessions on certain services are also included.

Among the 50 plus items where relief has been given includes sanitary pads, washing machines, refrigerators, cosmetics, jhadu, mixers, paints, footwear, rakhis, handicrafts among others.

In addition, the 28th GST Council meeting chaired by Finance Minister Piyush Goyal eased the compliance burden on small traders and businesses by enhancing the threshold limit for quarterly returns to Rs 5 crore. This would mean that 93 per cent of the taxpayers would now be filing returns on a quarterly basis but taxes on a monthly basis. Two new simpler return formats have also been approved.

In what appeared to be a mini-Budget announcement to create a feel good factor among the middle class, women, common man, the GST Council announced significant reductions in many goods and services used by these constituencies. For the small traders and business, there were many simplifications in compliance to reduce the burden.

Goyal said after the meeting that “simplification, rationalisation and relief for common man” were the guiding principles for today’s meeting, which went on for 9 hours.

On being asked about the revenue loss from these rate cuts, Goyal said that with simplification of processes, compliance will improve which will in turn boost revenue. With GST revenue settling at around Rs 1 lakh crore, the government wants to boost consumption and jobs in the economy as Goyal indicated that an assessment of the revenue impact can only be done after a year keeping this factors in mind.

Clearly a populist move, the government is moving to please consumers almost a year after the GST rollout to impress the fact that the new regime has brought benefits and also to address the small business and traders constituency which accounts for the maximum jobs in the country by easing the compliance burden. Keeping in line with the MSME focus, the next meeting of the GST Council on August 4 would be a special meeting only for MSME issues and to decide on an incentive package for making digital payments.

The GST Council accepted a longstanding demand for exempting sanitary pads as the GST tax was cut from 12 per cent to zero. The GST tax on sanitary pads has received flak with several campaigns and protests against the tax for the last year. In another women friendly measure, with the upcoming Raksha Bandhan festival coming up, rakhis were exempted from the tax, Goyal said. The tax on paints has been reduced for the middle class as the season usually picks up after the monsoons.

Among items on which GST was reduced include footwear, small televisions, water heater, electric ironing machines, refrigerators, lithium ion batteries, hair dryers, vacuum cleaners, food appliances and ethanol and handicrafts.

To boost jobs in the economy, the GST Council also recommended for allowing refund to fabrics on account of inverted duty structure. Fabrics attract GST at the rate of 5% subject to the condition that refund of accumulated ITC on account of inversion will not be allowed. However, considering the difficulty faced by the Fabric sector on account of this condition, the GST Council has recommended for allowing refund to fabrics on account of inverted duty structure.

Besides, tax rates on worked up Kota stone, sand stone and similar quality of local stones were cut from 18 to 12 per cent, with the purpose of avoiding classification disputes.

The value limit of footwear was enhanced from Rs 500 to Rs 1,000 for 5 per cent rate. GST on 17 items used by middle class, paints, refrigerators, washing machines, vacuum cleaners, storage water heaters, TVs up to 68 cm was reduced from 28 to 18 per cent.

On services, relief from GST taxation has been provided to categories including agriculture, farming and food processing industry, education, training and skill development and pension, social security and old age support.

The hotel industry has been given major relief by providing that the rate of tax on accommodation service will be based on transaction value instead of declared tariff. As a green initiative, GST on supply of e-books has been reduced from 18 to 5 per cent.

Given below is a list of revised GST rates.

Exempted

Sanitary napkins

Deities of stone iron and wood, rakhis

Brooms (jhadus)

Reduced to 5%

Ethanol

Footwear up to Rs 1,000

Carpets

Unpolished stones

Imported urea 

Reduced to 12%

Bamboo

Handbags

Handicraft items such as jewellery box. wooden box for paintings, artware of glass, stone endeavour, ornamental framed mirrors, handmade lamps

Kota stones, similar local stones  (polished)

Reduced to 18%

Refrigerators, small television, lithium batteries, mixers, heaters, electric irons, paints, water coolers, cosmetics, storage water heaters, head dryers, hand dryers, paint,varnishes, water cooler, milk cooler, ice cream coolers, perfumes, toilet sprays

Washing machines 

—With agencies