Government 5% GST: The GST Council is getting ready for its meeting on September 3 and 4, and this time the focus will be on making things cheaper for common people. From clothes to cinema tickets, many items are expected to get lower tax rates. Officials say this will help shoppers during the coming festive season, which starts with Navratri on September 22.
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Prime Minister Narendra Modi already talked about “GST 2.0” in his Independence Day speech, and the government now wants to simplify the system. The new plan has two main slabs of 5 percent and 18 percent, along with a special rate of 40 percent for some luxury or sin goods. Smaller rates like 0.25, 1 and 3 percent will also continue for special cases. A group of ministers has already agreed to this proposal, and now the Council will take the final call.
Government 5% GST: What could become cheaper?
Everyday items like toothpaste, hair oil and soaps are likely to be placed in the 5 percent slab. Readymade clothes and shoes may also see a big cut. If the price is below ₹2,500, the GST could drop from 12 percent to just 5 percent. But for items above ₹2,500, the tax may go up from 12 percent to 18 percent.
Movies and hotels are also part of the plan. A cinema ticket that costs less than ₹100 may soon get only 5 percent GST instead of the current 12 percent. Budget hotels with rooms up to ₹7,500 per night could also see the tax reduced from 12 percent to 5 percent, both with input tax credit.
But not everything will get cheaper. The Council is also discussing a very high 40 percent tax on some services like casinos, betting, horse racing and also IPL tickets. Expensive vehicles like racing cars, large motorbikes above 350cc, private helicopters and planes may also face 40% GST instead of the current 28% plus cess, reported The Hindu.
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Fertilizer Industry relief
The fertilizer sector is waiting to see if the Council will fix the inverted duty structure. Right now, fertilizer itself attracts 5 percent GST, but the raw materials like ammonia and even packaging material are taxed at 18 percent. This creates a problem where companies pay more tax on inputs than they collect on output, which leads to refund claims and legal disputes.
Government does give subsidy on fertilizers like urea and P&K types, but the way subsidy is calculated is different, and this keeps causing accumulation of input tax credit. Industry groups have been asking for a correction, and the upcoming meeting may finally take a decision.
