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  3. GST Council likely to consider lowering of tax rates on certain common use items

GST Council likely to consider lowering of tax rates on certain common use items

06 Nov 2017 Evaluate

With an aim to give relief to the common man as well as businesses, The Goods and Services Tax (GST) Council is likely to consider lowering of 28% GST rate on certain items. The Council, headed by Finance Minister Arun Jaitley may approve lowering of the tax rates on a number of goods, including handmade furniture, plastic products and daily use items like shampoo, and simplify return filing rules in its next meeting scheduled to be convened on November 10, 2017.

All types of furniture attract a 28% tax under GST. Wooden furniture is handmade by unorganised sector artisans and is mostly used by middle class families and there have been demands for lowering tax incidence on them. Also, some items of plastic attract 18% GST but goods like shower baths, sinks, wash basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware of plastics attract 28% levy. The GST panel is also expected to rationalise tax rate where tax rates have gone up because the items were either exempt from excise or were attracted lower VAT rates in the previous indirect tax regime. This may come as a big relief for small and medium enterprises.

Stressing on need to rationalise the tax incidence, the plastic manufacturers in their representation to the revenue department had said that 80% of the industry is in MSME category. Besides, the GST rate on weighing machines, compressors may also be rationalised to 18% from 28%. 90% of the manufacturers are from small and medium industries and in the pre-GST era were exempt from excise duty on manufactured value of less than Rs 1.5 crore. Hence, such machines only attracted VAT of 14.5%. With regard to compressors, the total pre-GST incidence was 17.5% (12.5% excise duty and 5% VAT).

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