Upcoming Reduction in Tax Rates under GST
The GST regime has brought a significant drop in its tax rates on various items since its implementation. The list of items with reduced tax rates has only been increasing over time. As if to add a cherry on top, Prime Minister Narendra Modi recently hinted that there will be a drop in the tax rates for 25-30 other products as well.
These items may include air conditioners, digital cameras, dishwashers, etc. He was quoted as saying, “Today the GST system has been established to a large extent and we are working towards a position where 99% items will attract the below 18% GST slab” and only the luxury items will be charged at a 28% GST rate . Farm-related products like sprinklers and irrigation items are also expected to be reduced in the future.
The top slab rate of GST only includes 35 items now, as compared to 226 items when GST was launched. It includes automobiles, soft drinks, guns and pistols, tobacco products, aircrafts and yachts for personal use, etc.
Washing machines, television sets, and refrigerators are not being charged at a rate of 18% GST as compared to 31% before GST. Mobile phones were earlier being charged at an 18-25% rate whereas under GST the rate has reduced to 12%. Similarly, furniture is being charged at 18% under GST as opposed to 25-31% rate in the pre-GST era. This trend has only been expanding as more and more items are being considered to be charged at lower slab rates.
In all, tax rates of 320 products have been reduced out of which 191 previously belonged to the top slab rate category under GST. As compared to the pre-GST era, the center and states have foregone revenue of Rs. 90,000 crore per annum. The taxpayers are said to be saving about 4% on their household expenditures per month as compared to the VAT regime.
Since GST implementation, businesses have complained of the return filing process and its implementation across the country. Prime Minister Narendra Modi addressed the issue by saying, “We are of the opinion of making GST as smooth as possible for enterprises”. The Prime Minister also emphasized that since GST was implemented, the number of registered taxpayers has increased to a great extent, from 65 lakhs to 1.2 crore till date.
The government has previously stated that the tax rates on items will be reduced with improvement in collection and compliance under GST. Modi commented on the improving efficiency of GST by saying, “The country was demanding GST for decades. I am pleased to say that GST implementation has removed contradictions in the trade market and efficiency of the system is improving. The economy is also getting transparent.”
(News Source: Times of India)