Air conditioners, dishwashers, digital cameras and televisions of more than 26 inches have not seen the GST cut and remain in the 28 per cent category
Goods and Service Tax (GST) Council of India announced on Saturday that it has slashed GST rates on 17 home appliances and consumer electronics including hair dryers and refrigerators, which will now be taxed under 18 per cent category instead of the current 28 per cent.
New GST rates to be implemented from July 27 onwards
While addressing the media, following the 28th meeting of the GST council, Finance Minister Piyush Goyal said, “Refrigerators, small televisions of up to 26 inches, lithium-ion batteries, vacuum cleaners, domestic electrical appliances such as food grinders, mixers…storage water heaters, immersion heaters, hair dryers, hand dryers, electric smoothing irons, among others have been brought to the 18 per cent category.”
A GST official has said that the GST reductions will cost the government a loss of almost Rs 7,000 crore. However, lesser GST will also trigger more sales and the government expects this strategy to make up for the loss and increase revenues instead.
Following this declaration, the GST official also stated that now only 35 items remain in the 28 per cent category including air conditioners and televisions exceeding the 25-inch mark. MS Mani, Deloitte India Partner said that it after this GST reductions stabilise, it would be logical to include other consumer electronics and home appliances such as dishwashers, digital cameras, air conditioners and televisions of all sizes under the 18 per cent category.
Manish Sharma, President of Consumer Electronics and Manufacturers Association (CEAMA), said that the decision has come at the right time especially when the festive season is arriving. “The reduction of GST slab on television sets of up to 26 inches from 28 per cent to 18 per cent will certainly improve the product penetration and affordability in smaller towns across the country,” he added.
Eric Braganza, President of home appliances and goods manufacturer, said: “This should be a good boost to the industry. This would stoke the demand. Hopefully, we would see good growth in the washing machine for the rest of the year and good business in the AC next year.”
Speaking along the lines of Mani, Sharma who is the President and Chief Executive Officer (CEO) of Panasonic India and South Asia as well, said that they had expected television sets of at least up to 43 inches to be included under the 18 per cent GST category “in order to improve the gamut of its usage even further.” The new GST rates will be applied beginning from July 27, 2018.
Firms with up to Rs 5 crore turnover to file quarterly returns
Besides the GST cut, the council also declared that enterprises that see an annual turnover of up to five crore rupees will now need to file quarterly returns as opposed to the current monthly filing. However, these companies must continue paying tax every month. Goyal informed that applying these reforms will take some time because the same need to be brought into the GST network as well.
The council brought specific amendments to the GST Act as well that includes raising the upper limit of turnovers for selecting the composition scheme from Rs 1 crore to Rs 1.5 crore.
Also, the council announced that the implementation of reverse charge mechanism wherein the recipient of the goods and/or services must pay GST to the government instead of the current system where the supplier of the goods and/or services pays it, has also been postponed. This new GST rule will now be implemented from October 2019.
The council also approved an amendment that will allow taxpayers to avail multiple registrations within a single state regarding businesses in more than one location in the same state.
