Published On : Fri, Jan 19th, 2018

Government slashes tax rates on goods, services

GST
Delhi: Finance Minister Arun Jaitley told reporters after a meeting of the GST council that a panel of federal and State finance ministers on Thursday decided to revise GST rates on 29 goods and 53 services,

Just days ahead of Country’s budget the government has slashed tax rates on some goods and services as it continues to rationalize its six-month-old regime to ease the pain for businesses hit by its chaotic roll out.

The council recommended reducing rates on diamond and precious stones to 0.25 percent from 3 percent, while the rate on 20-liter bottle of packaged drinking water fell to 12 percent from 18 percent, according to a government statement.

The adjustments are the latest in a series of tweaks the government has made to the GST. The rate cuts may lead to a revenue loss of Rs. 1,000 crore ($156.6 million) to Rs. 1,200 crore, an official said separately, asking not to be identified citing rules.

The council recommended reducing rates on old used motor vehicles and buses using bio fuels to 18 percent from 28 percent, while sugar-boiled confectionery and fertilizer grade phosphoric acid dropped to 12 percent from 18 percent. Rates on scientific and technical instruments and liquefied petroleum gas for households fell to 5 percent from 18 percent.

A 5 percent tax was imposed on rice bran, while the rate on cigarette filters was increased to 18 percent from 12 percent, it decided.

The council is expected to meet again before the end of the month. Jaitley said at the next meeting, the council will consider including new items into the goods and services tax fold — including gasoline and real estate. And given the onerous GST return filing procedure, the council is working on simplifying the process.

Prime Minister Narendra Modi’s administration has made several changes to the national sales tax launched in July, after disruptions to businesses and supply chains threatened to erode its effectiveness in converting the country into one of world’s biggest markets.

On Feb. 1, the government is set to present the budget, outlining its economic road map for the financial year starting April 1.

Taxpayers adapting to the GST have also faced issues with electronic filing of returns, forcing the government to extend deadlines and make one tweak after another.