It's about bleeding time: Govt junks GST on pads

The Goods and Services Tax (GST) Council chaired by Finance Minister Piyush Goyal on Saturday decided to reduce the indirect tax on about 50 items including sanitary pads and appliances of daily use such as TVs, fridges and washing machines. The Council also decided to simplify tax return filing mechanism for about 93 per cent taxpayers, mainly small traders, by allowing them to file returns on quarterly basis instead of monthly.

"GST has been cut on more than 50 items. However, 100 different items will be impacted by today's decision," Goyal told reporters after the 28th meeting of the GST Council.

Goyal said that simplification of tax filing process and rationalisation of taxes was the focus of today's meeting. Goyal said it was difficult to assess the revenue implication of the decision immediately and will have to be looked at in the context of employment generation.

Assam finance minister Himanta Biswa Sarma, however, said that reducing the rates of goods from 28% to 18% would result in a revenue loss of Rs 6,000 crore to the exchequer.

"Sanitary napkins exempted from GST," Goyal said. The GST on sanitary pads was cut from 12% to zero. Other items which have been exempted from the tax include rakhis, deities made of stone, wood or marble and fortified milk.

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

"GST Council cuts tax rate on an array of products. Rakhis have been exempted from GST, tax on ethanol has been cut to 5%, small handicrafts have been exempted," Goyal said.

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

The tax rate on footwear priced between Rs 500 and Rs 1,000 has been brought down to 5 % from 18% earlier. GST on e-books has also been reduced from 18% to 5%.

The Council also decided to provide relief on services, mainly relating to farming, food processing industry, education, training, skill development, pension, social security and old age support.

Hotel industry has been huge relief by allowing them to levy 28% tax on the actual value of room rent instead of the declared tariff of Rs 7,500 or above.

GST on 17 items used by middle class has been reduced from 28 to 18 %. These include paints, refrigerators, washing machines, vacuum cleaners, storage water heaters and TVs up to 68cm.

It was decided that traders with a turnover of up to Rs 5 crore would be allowed to file quarterly returns instead of monthly earlier, though they will have to deposit tax on monthly basis. This will provide relief to 93% taxpayers, Goyal said.

The Council recommended certain amendments to the Central GST Act, Integrated GST Act, UTGST Act and GST (compensation to states) Act to increase the limit of composition scheme along with providing relief to MSME and other sector.

The upper limit for opting for composition scheme has been increased to Rs 1.5 crore, the Council has recommended. The dealers providing services up to 10% of their turnover, subject to a maximum of Rs 5 lakh, will be eligible to opt for composition scheme. As part of the simplification in tax process, return forms will be simplified into two formats - Sugaam and Sahaj. The government will soon link RFID tags with GST Network (GSTN) for transporters and this will reduce harassment of transporters at toll plazas.

Among other recommendations, the Council asked to increase the threshold exemption limit for registration in the states of Assam, Arunachal Pradesh, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand to Rs 20 lakh from Rs 10 lakh. The next GST Council meeting will be held on 4 August and will focus on MSME sector.