New Delhi: The 37th meeting of the GST Council was held today, the very day when earlier the government took the industry by storm by announcing a massive reduction in corporate taxes, amidst demand from various industries to cut the tax rates on individual goods. After the meeting, Finance Minister Nirmala Sitharaman announced at a press conference where all taxes have been reduced and where they have been increased.
GST will be exempted also on some specific defence material manufactured outside India.
Talking to the media after the GST Council meeting, the finance minister talked about increasing the deadline to implement simple tax returns.
Small traders will get an exemption from the annual GST return. Businesses with an annual turnover of Rs 2 crore have been exempted from tax. The finance minister said that these companies would not have to file tax returns for 2018-19.
The GST rates have been reduced in hotel rentals at the council meeting. With this, people will now be able to get hotel rooms at lower prices. Now, hotel rent ranging from Rs 1,000 to Rs 7,500 will attract a 12% tax. However, 18% of tax will be levied on hotel rentals above Rs 7,500. Further, hotel rooms with rent of less than Rs 1,000 have been exempted from tax.
The government also announced an exemption in the GST on warehousing.
GST Council offers mixed bag to auto sector
The GST Council has recommended a 12% cess reduction on 1500 cc diesel and 1200 cc vehicles, thus boosting the small car segment of the auto sector. There is a 1% reduction in compensation cess on petrol vehicles with a capacity of 10-13 people, 3% on diesel vehicles. The rate of compensation cess on these vehicles is currently 15%.
However, tax reduction in the automobile industry was not considered.
The meeting of the council ended with the decision to have a 12% GST on polypropylene bags and sacks used in packing. Besides, GST exemption has been announced for goods and services supplied to FIFA for the Under-17 World Cup to be held in India.
The tax rate on slide fastener had been reduced from 18% to 12%, on marine fuel from 18% to 5%, on stone grinder from 12% to 5% and on dry tamarind from 5% to 0%.
Sin tax on soft drinks
GST on caffeinated beverages has been increased from 18% to 28% to make up for the revenue loss. Soft drinks will attract an 18% tax. Along with this, the segment will get a compensation rate of 12%.
The new rates will be applicable from 1 October.
The proposal to reduce rates on biscuits was rejected, notwithstanding Britannia hailing the government earlier in the day for a drastic cut in corporate taxes.
At the same time, GST on railway wagons and coaches has been increased from 5% to 12%.
GST will be exempted on certain defence goods that are not manufactured in India. This category will be exempted of GST by 2024.
Tax on outdoor catering will be reduced from 18% to 5%.