Guwahati, Sep 3: The 56th GST Council meeting, led by Finance Minister Nirmala Sitharaman, begins in New Delhi today. The two day Council meeting is likely to scrap the existing 12% and 28 % GST slabs, moving towards a two tier structure of 18 % and 5 %. Additionally, a 40 % GST slab is anticipated for “sin” goods like tobacco and other luxury items.
Expectations are high that the council will announce tax cuts that will affect hundreds of products, from shampoos and toothpaste to hybrid cars.
When Prime Minister Narendra Modi announced next-generation GST reforms in his Independence Day speech on August 15, his intent must have been not only to reduce the tax burden on consumers but also to reinvigorate the consumption cycle, which has remained dull despite healthy monsoons and income tax relief.
According to Arsh Mogre, Economist, PL capital said, “The GST Council meeting is expected to be a pivotal event, with anticipations of a potential tax rationalizations- especially benefiting consumption- led plays like auto and FMCG sectors”.
GST Council Meeting: Sectors in focus
Automobile: The automobile sector which is currently taxed at the highest slab of 28 % along with a compensation cess, may soon face revised rates, with entry level cars taxed at 18 % and SUVs and luxury vehicles placed under a special 40 % rate.
Fast Moving Consumer Goods (FMCG): The Goods and Services Tax (GST) on FMCG such as shampoos, toothpaste and talcum powder may be reduced from the current 18 % to 5 %, according to several media reports. Also items like milk powder, cooking oil, noodles, chocolates and sugar are also expected to come down from the current 18 % to 5 %.
Consumer Durables and Electronics: Electronic items such as TVs, washing Machines, refrigerators are also expected to be decreased to 18% down from the current 28 per cent.
Insurance: A full exemption could lower health insurance premiums by approximately 15%. Even a modest 6% reduction in premiums under the 12% GST with input tax credit may help ease expenses for policyholders. However, the government might experience an annual revenue shortfall of USD 1.2-1.4 billion from GST on premiums if exemptions are granted, ANI reported citing HSBC data.
Tyres: The Automotive Tyre Manufacturers Association (ATMA) on Monday appealed to the government to slash the GST on automotive tyres from the existing 28 per cent to 5 per cent, stressing that tyres should not be treated as luxury items given their substantial cost burden on crucial sectors such as transportation, agriculture, mining, and construction.
Sin Products: The special 40 per cent rate will also apply to other demerit goods such as tobacco, pan masala, and cigarettes. An additional tax may also be levied on this category over and above this rate.
GST Council Meeting LIVE Updates: Assam CM supporting move of PM Modi
“We are supporting the move of the Prime Minister. Assam’s view is to lower GST to 5% and 18%. We will completely support the decision of the Government of India,” says Assam CM Himanta Biswa Sarma
