The Goods and Service Tax (GST) rates on many household items could change very soon depending on the decision of the all-powerful GST Council which meets next on November 10. The GST is likely to consider lowering GST rate on certain common use items such as handmade furniture, plastic products and daily use items like shampoo. The process to simplify return filing rules will also be discussed in the meeting, PTI reported citing government officials.
There could be some good news for small and medium enterprises as the Council may offer further relief and rationalise tax rate in sectors where the total incidence of taxation has gone up because the goods were earlier either exempt from excise or was attracted lower VAT rates in the previous indirect tax regime.
Among the top items under consideration are household items that fall in the 28 per cent basket, such as all types furniture attract. Since wooden furniture is mostly handmade by unorganised sector artisans, with the middle class as the primary consumers, there have been demands for lowering tax incidence on them.
Other items in the same tax basket include shower baths, sinks, wash basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware of plastics. There is a need for rationalisation of tax rates on these items, officials said.
The plastic manufacturers in their representation to the revenue department had said that 80 per cent of the industry is in MSME category. Besides, the GST rate on weighing machines, compressors may also be rationalised to 18 per cent from 28 per cent.
Officials said 90 per cent of the manufacturers are from small and medium industries who 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 per cent. With regard to compressors, the total pre-GST incidence was 17.5 per cent (12.5 per cent excise duty and 5 per cent VAT), they said stressing on need to rationalise the tax incidence.
The GST Council, which comprises of representatives of all states, have already rationalised tax rates for over 100 items. The Council has last month approved an Approach Paper to be followed by the fitment committee while deciding on future rate revisions. Under GST various goods and services have been bracketed in 5, 12, 18 and 28 per cent.
GST has subsumed over a dozen taxes, including excise, service tax and VAT, and transformed India into a single market.
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