New Delhi: Computer monitors, TV screens, video games, lithium-ion power banks, retreaded tyres, wheelchairs and cinema tickets are among products and services set to get cheaper with their removal from the GST regime's highest 28 per cent tax bracket by the GST Council on Saturday, with the industry lauding the latest reductions as a boost for demand.
Among the items consumed by the common man, only cement continues to remain, along with luxury and 'sin' goods, in the 28 per cent bracket as the Goods and Services Tax (GST) Council brought down the rates of all other categories of goods in a further rationalisation of rates that left only 28 items in the highest tax slab.
A total of 17 items and six services have been reduced which will result in a revenue impact of Rs 5,500 crore for the full fiscal, Finance Minister Arun Jaitley said, briefing reporters here after the 31st meeting of the Council chaired by him.
"There are 28 items left in the 28 per cent bracket if we include 'luxury and sin items', and items used by economically well-off sections of the society, only one item of common man's usage - cement - remains in the bracket," Jaitley said.
Second-hand tyres, video games, monitors and television screens up to 32 inches, and lithium battery power banks will now attract 18 per cent GST.
The GST on wheelchair accessories has been brought down to 5 per cent from the existing 28, which will also allow the payment of input tax credit that is not possible with zero tax," Jaitley said.
Airconditioners and dishwashers have been left untouched at the highest rate because these are not items of common use in India, he said.
Nearly 1,250 goods and services have been categorised under the four tax slabs of 5, 12, 18 and 28 per cent under the GST regime.
The GST Council postponed a decision to the next meeting in January on five issues - taxation of residential properties, extending the composition scheme for small businesses to small service providers, the tax rate on lotteries, raising the exemption threshold for MSMEs and on the tax to provide relief in natural calamities.
Cutting the rates on cement and automobile parts would mean a combined revenue loss of Rs 33,000 crore, which the Council felt is "too steep" to be considered at this juncture, Jaitley said.
While the GST on third party motor vehicle insurance has been cut from 18 to 12 oer cent, cinema tickets up to Rs 100 have also been granted a similar reduction. Movie tickets costing more that Rs 100 have been brought down from 28 to 18 per cent.
"It's a mass entertainment medium and its revenue impact is about Rs 900 crore," the Finance Minister said on the reduced tax on movie tickets.
GST on solar power generating plants and renewable energy items have also been reduced, he added.
A major decision taken was that services supplied by banks to basic savings bank deposit accounts and holders of Jan Dhan accounts will be exempt from GST.
The Council also decided to form a seven-member Group of Ministers (GoM) to study anomalies in tax collection in some of the states which showed wide deviation from what was expected in terms of shortfall.
"The Council has approved the proposal to form a seven-member GoM to study the revenue trend, including analysing reasons for structural patterns affecting revenue collection in some of the states," Jaitley said.
He noted that the average monthly collection of GST has fallen short of the target which had been set at substantially high level of 14 per cent increase compunded annually.
"In many states there is improvement (collection), but we have a very stiff target. From the base year 2015-16, three increases of 14 per cent, this year's target would be nearly 50 per cent above the base year. Falling short of the target by 5-10 per cent, is because the target is very stiff," the Union Finance Minister said.
The Council also approved the creation of a centralised Appellate Authority for Advance Ruling (AAAR) to deal with cases of conflicting decisions by two or more state AAARs on the same issue.
Jaitley also announced that the Council took 16 policy decisions were taken in order to simplify processes like return filing and claim filing.
This major tax rationalisation ahead of the 2019 general elections comes after Prime Minister Narendra Modi recently promised to bring 99 per cent the goods under the 18 percent or lower GST slab.
Commenting on the development, advisory multinational Deloitte said the selection of items for rate reductions "appear to be influenced by the desire to minimise revenue dips."
"The GST Council's decision to reduce the GST rates of certain items is a step towards keeping the indirect taxes rates at moderate level. This measure will bring down the final price to consumer and is expected to encourage higher demand/consumption with consequent boost to manufacturing sector," Deloitte India Senior Director R. Muralidharan said in a statement.
Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal said that the reduction in rates "will on one side will lower the cost of production of large number of items and on the other hand will make consumers more comfortable."
"The reduction in GST rates announced would certainly bring economic benefits inter-alia political interpretations. Although, a lot was expected for the real estate sector, it seems the Government is taking one stitch at a time," said Grant Thornton India Partner Suresh Nandlal Rohira.