Let’s look at the major developments over the past 6 months since its implementation:
July: India’s biggest tax reform was introduced
The month of July started with the release of a long list of commodities and services on which GST was applicable.
Mobile phone bills, cigarettes, home appliances, insurance premiums, personal care products, hotel stays all were taxed at 5%,12%,18% and 28%. For instance, the banking sector was put into the tax bracket of 18%, previously from 15%. Hotel stays were put into the tax bracket of 28%.
But what caught people’s attention the most was the 12% tax on the sanitary napkins. “Sex is a choice, periods are not” was the slogan going around at that. Doctors and women activists strongly opposed the tax levied on sanitary as it is an issue of basic hygiene, which was non-negotiable.
August: Finalised the much awaited e-way bill
In the second meeting of the GST Council after the implementation of GST, the council finalised the much awaited e-way bill. The bill makes it compulsory to register all goods over ₹50,000 before they are moved for sale beyond 10kms. This bill comes as a replacement to the previous ‘way bill’ that was required for the movement of goods when VAT was in use. The way bill was a physical document whereas the e-way bill is an electronically generated bill. The draft says that the e-way will be valid for 1-20 days, depending on the distance to be traveled. The e-way bill will not be required for exempted goods.
September: Nationwide protests by handicraft workers on GST
The government felt the need to relieve artisans and handicraft workers of the GST imposed on them. Pre GST, the tax levied on them was 12% and with the implementation it rose up to 28%, causing nationwide protest by traditional weavers.
They complained that they couldn’t afford any of their raw materials and hence their industry would go into losses.
Therefore, the government decided to slash the prices on 18 handicraft items which include items like idols made of clay, wood, stone, metals, table and kitchenware, paper machine articles, stone inlay work, statues, worked ivory, bone, shell horn items, cotton quilts, brooms and brushes and some natural fibre products.
October: Government reduces the burden on small business and exporters
The government has received a lot of flak from the small and medium businessmen and the exporters. This sector was hit the hardest because of demonetization and the GST roll out. As a result of this, PM Modi had instructed the GST Council to suggest solutions to provide relief to the small businessmen.
The Council in the meet recommended a reduction of tax rates on 27 items. The items for daily consumption were placed under the 5% slab. For instance, the tax slab of unbranded namkeen has been reduced from 12% to 5%. Further raw material like plastic and rubber waste witnessed a drop from 18% to 5%.
Further, the Council also set up a Group of Ministers to look into various issues faced by this sector.
November: Dining out became cheaper
A great development in the month of November was the government doing away with the tax levied on restaurants. They dropped it from 18% to 5%. So now, all the restaurants, both AC and non-AC, would levy a uniform 5% tax. While doing so, they did away with the distinction between A/C and Non-A/C in restaurant’s previously charged 12% in Non-A/C and 18% in A/c.
Along with this clarification, the GST council decided to slash the taxes of 178 items in the tax bracket of 28% to 18%. So, items like chewing gum, chocolates beauty products, wigs and wrist watches etc. were reduced significantly.
December: Government hints to merge 2 tax slabs
Arun Jaitley, the finance minister, indicated that the government and the council might merge current tax slabs of 18% and 12% into one. Thus, the number of slabs under GST would be limited to just 3.
Further, the council also stated that they would consider reducing the number of items under the highest tax slab ie 28%.