India’s most comprehensive indirect tax reform — the goods and services tax (GST) — is inching towards a July 1 rollout with the GST Council cutting the rate on household goods and other essential items, raising the threshold for the scheme that requires lesser compliance and approving another key set of rules relating to audit and accounts.
At its meeting on Sunday in the Capital, the council revised rates on 66 items such as pickles, sauces, fruit preserves, insulin, cashew nuts, insulin, school bags, colouring books, notebooks, printers, cutlery, agarbattis and cinema tickets, following representations from industry.
Restaurants, manufacturers and traders having a turnover of up to Rs 75 lakh can avail of the composition scheme with lower rates of 5%, 2% and 1%, respectively, with lower compliance, against Rs 50 lakh previously.
“After considering recommendations of fitment committee, rates are being reduced in the case of 66 items.Revenue buoyancy and prices remaining in check will balance out the changes, it is hoped.
A number of household items in the packaged food category that had been placed in the 18% bracket such as pickles, mustard sauce, ketchups, fruit preserves and sandwich toppings will now attract 12% GST.
The rate on agarbattis has been lowered to 5% from 12% proposed earlier. School bags will face a rate of 18% instead of 28%, exercise books will attract 12% instead of 18% and colouring books will be exempt instead of 12% proposed earlier. Steel cutlery will attract 12% instead of 18% and computer printers 18% instead of 28%. Fly ash bricks and blocks will attract 12%
Movie tickets costing below Rs 100 will now attract 18% GST while 28% will continue for those over Rs 100. “Consumers will benefit from the reduction in rates.
CHEER FOR SMES AND MANUFACTURERS
More entities will be able to take advantage of the composition scheme now with the changes in the threshold.
This should mean that a significant number of SME (small and medium enterprise) sector players should benefit from not having to meet with detailed compliances under GST and also having a less financial burden, on account of GST.
For workers in industries such as textiles and, gems and jewellery, where they take work home, a GST rate of 5% will be charged instead of the 18% standard rate on outsourcing.