Friday October 18, 2019
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Alcohol, tobacco kept out of the purview of GST

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By NewsGram Staff Writer
After passing the Goods and Services Tax (GST) Bill 2014, the Lok Sabha has also approved an amendment to help all the states in the transition phase by charging an additional tax of 1 per cent on inter-state trade on goods.

After regular imposition of indirect taxes, like excise, service tax, VAT and sales tax, in different sectors by the central and state governments, the pan-India goods and services tax regime has planned to facilitate a common market in the country.

However, the taxes on all the highly consumable products like petroleum, alcohol for human consumption and tobacco have been kept out of the purview of GST.

Taxes collected on alcohol yields a major part of state revenues. Taking an example of Kerala, it contributes 22 per cent of revenue, while in Tamil Nadu, it gives about Rs. 21,000 crore per year.

Transport fuels, like petrol and diesel, are taxed at 20 per cent, whereas states receive 35 per cent of their sales tax revenues from them.

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GST Council Lowers Tax on Number of Goods and Services to Spur Demand

The hotel rooms costing between Rs 1,000 and Rs 7,500 would attract 12 per cent GST

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GST, Council, Tax
Announcing the rate cuts following the GST Council meeting here, Finance Minister Nirmala Sitharaman said that hotels room with tariff of Rs 7,500 crore would now attract 18 per cent GST from 28 per cent earlier. Pixabay

Friday proved to be a big day for India Inc. After a slew of tax concessions including reduction in corporate tax from 30 per cent to 22 per cent, the GST Council has lowered tax on a number of goods and services to spur demand.

The key sectors which would benefit from GST rate cuts are hotels, gems & jewellery, defence and automobiles.

Announcing the rate cuts following the GST Council meeting here, Finance Minister Nirmala Sitharaman said that hotels room with tariff of Rs 7,500 crore would now attract 18 per cent GST from 28 per cent earlier. The hotel rooms costing between Rs 1,000 and Rs 7,500 would attract 12 per cent GST. No tax would be levied on hotel rooms with rental upto Rs 1,000.

Among other rate changes, the Council has reduced rates for cups and plates made from leaves and hides to nil. The GST on caffeinated beverages has, however, been increased from 18 per cent to 28 per cent plus additional 12 per cent cess.

GST, Council, Tax
Friday proved to be a big day for India Inc. After a slew of tax concessions including reduction in corporate tax from 30 per cent to 22 per cent, the GST Council has lowered tax. Pixabay

The Council has exempted specified defence items from GST to promote this key sector.

Among other major items, the Council has reduced compensation cess on passenger vehicles with seating capacity of 10-13 persons by 1-3 per cent, thus making them cheaper.

Railway wagons, coaches and rolling stocks would, however, now attract higher GST of 12 per cent from 5 per cent earlier.

The revised GST rates would become effective from October 1, 2019.

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In a major boost to gems and jewellery sector, the Council recommended to reduce GST on cut and polished semi-precious items to 0.25 per cent from 3 per cent now.

The two back-to-back announcements are set to boost growth and investment.

With most engines of growth stuttering and GDP declining to six-year low of 5 per cent in the April-June quarter, pressure has been mounting on the government to revive the economy. Some external factors like US-China trade war has added to the woes.

GST, Council, Tax
The key sectors which would benefit from GST rate cuts are hotels, gems & jewellery, defence and automobiles. Pixabay

In the wake of domestic and external headwinds, the Reserve Bank of India recently lowered its GDP forecast and pegged it at 6.9 per cent in 2019-20. Several rating agencies and research firms expect the growth to be in the range of 6.5-7 per cent.

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The poor show in the first quarter of the current fiscal has prompted the Modi government to take measures to boost growth and lift business sentiment. Starting August 23, Finance Minister Sitharaman has announced four set of measures to put economy on fast track. (IANS)