GST Council Meets Today – Rate Cuts Likely

The GST Council (Goods and Services Tax Council) is likely to reduce the rates on a handful of products at its meeting on Saturday.

The Goods and Services Tax Council is likely to reduce the rates on a handful of products at its meeting on Saturday. That on sanitary napkins is likely to be cut from the present 12 per cent to five per cent. Lower rates are also possible on handicrafts, handlooms and e-books, among others.

“The rationalisation of rates will be taken up for smaller items that do not have major revenue implications but are commonly consumed. However, we would not be touching the items in the highest slab,” said a government official. It is unclear if the issue of levying a cess on sugar will be on the agenda but the GST on ethanol is likely to be reduced to 12 per cent from the current 18 per cent.

A panel headed by Assam finance minister Himanta Biswa Sarma has not favoured the sugar cess, proposed by the Centre to ease payments from mills to sugarcane farmers.

An alternative could be to instead impose a cess of one per cent on luxury goods.

The Council will be having a full-fledged meeting after a little over three months.

Sanitary napkins, handlooms and handicrafts are currently taxed at 12 per cent; e-books attract 18 per cent.

Women’s groups have campaigned for less GST on sanitary napkins. Also last year, the high court here had asked the government why this product had not been exempt from GST when items such as bindis, sindoor and kajal were.

“The proposal before the Council will be to reduce the rate to five per cent for sanitary napkins; reducing it to nil will deprive domestic manufacturers from input tax credit. That will put them at a disadvantage as against import,” said a government official. Rate reduction for handlooms was discussed in the past few meetings as well but the Council could not agree on a definition acceptable to all states.

“The discussion is centering around whether the reduction should apply to the cloth or products made out of handlooms. It could be products that contain at least 50 per cent handloom,” said an official.

As for handicrafts, it could be items priced up to a certain limit that might see a rate cut, such as Rs 500 or Rs 1,000. The Council might also take up rate reduction on e-books, taxed at 18 per cent as against a nil rate for normal books.

“Normal books are exempt. An e-book is nothing but a book; only the mode of delivery is online. Hence, there should not be any distinction. In no other GST regime anywhere in the world has there been a distinction between normal books and e-books,” said Pratik Jain, partner at consultancy PwC India.

The Council will also take forward the issue of return simplification, approved by it at the earlier meeting.

“It is essential to simplify returns and provide staggered timelines for return filing,” said M S Mani, partner at consultants Deloitte India.

Source: BS