Centre, States Move to Implement Latest Round of GST Rate Cuts Announcements

Central and state governments are expected to issue more notifications shortly as they give effect to the tax rate cuts on about 22 items

The central government on Monday night notified goods and service tax rate cuts on movie tickets and certain services like third party insurance as had been announced by the federal indirect tax body, the Goods and Services Tax (GST) Council on 22 December.

The notifications are effective from 1 January. Central and state governments are expected to issue more notifications shortly as they give effect to the tax rate cuts on about 22 items that the Council had announced.

While the central government notifies the rate reduction on central GST (CGST) and integrated GST (IGST) applicable on imports and inter-state sales, states notify the state (SGST) rates.

The Council had at its last meeting decided to lower rates on seven items which were in the highest slab of 28% as part of a tax slab rationalisation.

The items in the highest slab benefiting from the rate cut included pulleys and transmission shafts used in farming, monitors and TVs up to screen size of 32 inches, power banks, retreaded tyres, digital cameras and video camera recorders, and video game consoles. The rate on these items are being lowered to 18%.

It was also announced that parts of carriages for disabled people, which were earlier taxed at 28%, will be reduced to 5%. The rate cuts will have a revenue impact of Rs 5,500 crore for the full year.

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GST Roadmap To Be To Work Towards A Single Rate Between 12%, 18% | Arun Jaitley

GST Roadmap

Finance Minister Arun Jaitley said the country should look towards having slabs of zero, five percent and a standard rate for luxury and sin goods.

Highlights

1. Government aims to simplify Goods and Services Tax Structure
2. A single standard rate instead of two rates of 12%, 18% on the cards
3. Government to also look at transferring cement into a lower GST Rate

The government is working towards a single national sales tax rate which could be a mid-point between 12% and 18%, Finance Minister Arun Jaitley said on Monday, in an effort to simplify the tax structure. The government set the range for the  Goods and Service Tax (GST) from 28 per cent to 5 percent on most items when the signature reform was introduced last year.

"Multiple slabs were fixed transiently in order to ensure the tax of no commodity goes up radically. This contained the inflation impact," Mr Jaitley wrote in his blog.

A future road map could well be to work towards a single standard rate instead of two standard rates of 12% and 18%. It could be a rate at some mid-point between the two."

He also said the country should look towards having slabs of zero, five per cent and a standard rate for luxury and sin goods (alcohol, drugs, cigarettes, etc.).
The government will also look at transferring cement into a lower tax slab as the next priority, he wrote.

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