GST Council on hiking rates of 143 items ask states to analysis

GST Council on hiking rates of 143 items ask states to analysis

As part of a proposed rate rationalization under the Goods and Services Tax (GST) rule to strengthen revenues, the GST Council, the governing body for the indirect tax rule, has sought states' views on hiking rates on 143 items.

These items include non-alcoholic beverages, gur (jaggery), power banks, watches, suitcases, handbags, perfumes/deodorants, clothing accessories of leather, chocolates, chewing gums, walnuts,
custard powder, papad, ceramic sinks, washbasins, goggles, frames for spectacles/goggles, and apparel and color TV sets (below 32 inches), sources said.

Of these 143 items, 92 percent are proposed to be shifted from the 18 percent tax slab to the top 28 percent slab.

Rates for items such as sound recording apparatus, floor coverings of plastics, chocolates, cocoa powder, beauty or make-up preparations, fireworks, leather apparel and accessories, lamps, perfumes, and armored tanks were reduced in the November 2017 meeting held in Guwahati and are now proposed to be hiked again. Similarly, GST rates for items such as color TV sets and monitors (below 32 inches), digital and video camera recorders, and power banks were reduced in the December 2018 meeting and may now get reversed.

GST rates for papad and gur (jaggery) items may move from zero to the 5 percent tax slab. Leather apparel and accessories, wristwatches, razors, handbags/shopping bags, pre-shave/after-shave preparations, concentrates of coffee, chocolates, waffles, cocoa powder, extracts, and dental floss, non-alcoholic beverages, perfumes,

Along with house constructions, items of ceramic sinks, washbasins, plywood, doors, windows, and electrical apparatus (sockets, switches, etc.) may see a GST rate being hiked to 28 percent from 18 percent.

GST rate for walnuts may hike to 12 percent from 5 percent, for custard powder to 18 percent from 5 percent, and table and kitchenware of wood to 18 percent from 12 percent.

In a meeting in 2017, the highest GST bracket was slashed by 75 percent, with only 50 items being retained in the 28 percent slab 178 items being moved out from the list of 228, along with a rate cut for restaurants. The estimated revenue loss was pegged to be around Rs 20,000 crore through these measures.

The GST council is now learned to have sent the proposal for rate changes to states seeking their input.

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The changes in rates may happen in phases since many states have raised threats about the timing of these proposed changes, given the rising inflation trajectory. The WPI-based inflation surged to 14.55 percent in March 2022, while the retail inflation in March increased to a 17-month high of 6.95 percent.

The robust GST collections in recent months are being seen as an indicator of growth in the organized segment of the economy and higher inflation rates along with anti-evasion measures, including action against fake billers.

GST collections rose to a record high of Rs 1.42 lakh crore in March for sales in February — a 14.7 percent rise from March 2021 and a 45.6 percent spike from March 2020.

The revenue stream anomalies arising from earlier rounds of rate rationalization were noted in the 45th GST Council meeting held in Lucknow in September 2021. After the meeting, Union Finance Minister Nirmala Sitharaman said that the revenue-neutral rate has fallen to 11.6 percent from 15.5 percent.

GST collections rose to a record high of Rs 1.42 lakh crore in March for sales in February — a 14.7 percent rise from March 2021 and a 45.6 percent spike from March 2020.

The revenue stream anomalies arising from earlier rounds of rate rationalization were noted in the 45th GST Council meeting held in Lucknow in September 2021. After the meeting, Union Finance Minister Nirmala Sitharaman said that the revenue-neutral rate has fallen to 11.6 percent from 15.5 percent.

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