The GST Council headed by Finance Minister Arun Jaitley on Thursday cut the tax rate on 29 goods including second-hand cars, confectionery, bottled water and mehendi and 54 categories of services such as education, insurance, entertainment and tourism which will now turn cheaper. The Council cut GST rate on second-hand medium and large cars and SUVs from 28 per cent to 18 per cent and on other old and used motor vehicles to 12 per cent. Tax on diamonds and precious stones was slashed to 0.25 per cent from current 3 per cent. Tax rate on sugar boiled confectionery, drinking water packed in 20-litre bottles, tamarind kernel power, mehendi paste in cones, articles of straw, velvet fabric and rice bran was also cut.
The new GST rates will come into effect from January 25. The GST rate on services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet, has been scaled from 28% to 18% which will come as a relief for consumers. It was also decided by the GST Council to increase the threshold limit for exemption for all theatrical performances like music, dance, drama, orchestra, folk or classical arts and all other such activities in any Indian language in theatre GST from Rs. 250 to 500 per person and to also extend the threshold exemption to services by way of admission to a planetarium. Besides, it decided to allow input tax credit (ITC) for services in the same line of business at the GST rate of 5% in case of tour operator services.
The GST rate on tailoring has been reduced from 18% to 5% which will ease some inflationary pressure on households. GST on job work services rate for manufacture of leather goods and footwear has been cut to 5%. To ease the burden on households it has been decided to raise the exemption limit of GST from Rs 5000 per month per member to Rs 7500 for services provided by resident welfare associations to their members against their individual contribution.
Services relating to admission to, or conduct of examination provided to all educational institutions have been exempted from GST. Similarly, no GST will be levied on services by educational institutions by way of conduct of entrance examination against consideration in the form of entrance fee. The GST Council decided to exempt subscription of online educational journals/periodicals by educational institutions who provide degree recognized by any law from GST. Services provided by school buses have also been exempted from GST. Services of life insurance business provided under life micro insurance product approved by IRDAI up to maximum amount of cover of Rs. 50,000 will also be exempt from GST.
The GST rate on transportation of petroleum crude and petroleum products such as petrol, diesel and jet fuel has been cut from 18% to 5% without ITC (input tax credit) and 12% with ITC. GST rates on work contracts for government construction projects has been reduced from 18% to 12%. To reduce GST on Common Effluent Treatment Plants services of treatment of effluents, from 18% to 12%. To exempt services by way of fumigation in a warehouse of agricultural produce.
LOOKING FOR SIMPLER WAY OUT
The Council, in its 25th meeting also discussed process to make filing of GST returns simpler with just one return to be filed every month. The Council discussed the possibility of retaining only GSTR-3B or initial sales return, while mandating sellers to upload their invoices. Jaitley said the GSTR-3B and the invoices can be matched by tax officers and in case of difference, at a later stage businesses can be asked to explained. A final decision would be taken at the next meeting of the Council. Asked if filing only one return is the way forward, he said that seems to be the course. Businesses at present have to file GSTR-3B as well as GSTR-1, which is the final invoice wise sales returns.
The minister further said that a nation-wide roll out of e-way bill will happen on February 1 for inter-state transportation of goods on highways. Additionally, 15 states have said they will also start off with e-way bill for intra- state movement of goods on the same day. Jaitley further said that tax revenues from businesses opting for composition scheme was a matter of serious concern as 17 lakh businesses who have opted for the scheme have paid a cumulative tax of Rs 307 crore in the first quarter.
- Second hand cars will now attract 18% tax down from earlier 28%
- GST on mehendi cut to 5% from 18%earlier
- Tax on confectionery cut to 12% from 18%
- Tax on drinking water packed in 20 litres bottles cut to 12% from 18%
- Velvet fabric GST reduced to 5% from 12% earlier
- Rice bran will not be taxed