GST rates slashed on 29 goods, 54 services

New Delhi: The all-powerful GST Council on Thursday agreed to slash tax rates on around 29 goods and 54 categories of services, including diamonds and precious stones, 20-litre water bottles, secondhand vehicles, tailoring services, entry into theme parks, water parks and joyrides, sugar-boiled confectionery and vibhuti, among others.

With the government facing criticism from trade and industry circles over the huge compliance burden put on them by GST, the GST Council veered around to the idea of making the GST return filing process simpler by filing only one return in a month, where only supply invoices will be adequate to deposit the tax. The filing of GSTR 1, 2 and 3 will be discontinued in future under the new system.

The new tax rates would be effective from January 25. The Centre expects Rs 1,100 crore annually loss from cut in GST rates announced on Thursday.

Infosys co-founder Nandan Nilekani gave a presentation to the council on the model to simplify the return-filing process. Union finance minister Arun Jaitley said the new process would be finalised at the council’s next meeting, which will be held before the Union Budget, after a written formulation is circulated to the states. The registered entities will continue to file their returns in the GSTR-3B form till then.

Bihar deputy chief minister Sushil Kumar Modi, GSTN chairman Ajay Bhusan Pandey and Mr Nilekani would formalise the structure.

Mr Jaitley said that bringing petrol and diesel and real estate under GST will be discussed at the next meeting. With crude oil prices on a boil, there has been a demand to bring petrol and diesel under GST to cut taxes on them and give some relief to the general public.

The finance minister said that under-reporting of revenue was a concern, especially among those registered under the compliance scheme. He said that the e-way bill will be one of the anti-tax evasion measures which will be implemented across country from February 1, and added that 15 states had agreed to also implement it for intra-state movement of goods from next month.

The GST Council decided to provide a three-year GST exemption for viability gap funding under the regional air connectivity scheme. This scheme, also known as Udan (Ude Desh ka Aam Naagrik), seeks to connect unserved and under-served airports as well as make flying more affordable. The participating airlines are eligible for VGF subject to certain conditions.

The GST on diamonds and precious stones will be reduced from three per cent to 0.25 per cent. The GST Council decided to slash tax from 28 per cent to 18 per cent on buses to be used in public transport, which will exclusively run on bio-fuels. It decided to slash the GST rate from 18 per cent to 12 per cent on sugar-boiled confectionery, drinking water packed in 20-litre bottles, fertiliser grade phosphoric acid, bio-diesel, drip irrigation system, including laterals and sprinklers. The GST Council approved slashing tax from 18 per cent to five per cent on tamarind kernel powder, mehendi paste in cones, LPG supplied for supply to household domestic consumers by private LPG distributors.

The GST on velvet fabric will be cut from 12 per cent to five per cent. There will be no GST on vibhuti and parts and accessories for manufacture of hearing aids. However, tax rates will be increased on cigarette filter rods from 12 per cent to 18 per cent. Five per cent GST will be levied on small housekeeping service providers. On services, the GST Council decided to reduce tax on tailoring services from 18 per cent to five per cent. It accepted the proposal for GST on services by way of admission to theme parks, water parks, joyrides, merry-go-rounds, go-carting and ballet, from 28 per cent to 18 per cent. In good news for housing societies, the GST Council has decided to enhance the exemption limit of Rs 5,000 per month per member to Rs 7,500 in respect of services that are provided by resident welfare associations to their members against their individual contribution.

The GST rate will be cut on transportation of petroleum crude and petroleum products (petrol, diesel and ATF) from 18 per cent to five per cent without input tax credit and 12 per cent with ITC. The council approved a cut in the job work services rate for the manufacture of leather goods and footwear to five per cent. It agreed to increase threshold limit for exemption from GST for all the theatrical performances like music, dance, drama, orchestra, folk or classical arts in any Indian language in theatre from Rs 250 to Rs 500 per person. The GST Council decided to reduce GST to 12 per cent in respect of mining or exploration services of petroleum crude and natural gas. Subscription of online educational journals/periodicals by educational institutions who provide a recognised degree will be exempt from GST. The GST Council clarified that services provided by senior doctors, consultants and technicians hired by the hospitals, whether employees or not, are healthcare services, which is exempt. Hospitals also provide healthcare services. The entire amount charged by them from patients, including the retention money and fee/payments made to doctors and  others, is towards healthcare services provided by the hospitals to patients, and is exempt from GST. Food supplied to in-patients as advised by doctor/nutritionists is a part of the composite supply of healthcare and not separately taxable. However, other supplies of food by a hospital to patients (not admitted) or their attendants or visitors is taxable.