JBS Umanadh, Hyderabad/New Delhi, DH News Service, Sep 10 2017, 1:18 IST
Council decided to increase tax on mid segment cars from 43% to 45%. DH Photo
The Goods and Services Tax (GST) Council on Saturday reduced the tax rates on a number of goods used daily by the people.
The council, however, imposed an additional cess on luxury vehicles, SUVs and mid-sized cars.
Addressing major glitches in the GST Network (GSTN), the council also extended the deadline for filing tax returns by one month - October 10.
The council, headed by Finance Minister Arun Jaitley, set up a five-member ministerial committee to look into GSTN’s day-to-day functioning and allowed videoconferencing of state finance ministers as and when the implementation problem arises.
“We have reduced rates for dried tamarind, roasted gram, raincoats and agarbatti among other things,” the finance minister said.
Ahead of Dasara, clay idols were exempted from GST. But food brands with registered trademarks as on May 15, 2017, will pay a 5% GST.
“The food industry had started de-registering their trademark and started selling under the de-registered trademark or the corporate brand. This created an inequality of trade. By this, some got a tax advantage, so we amended the requirements,” Jaitley said.
Though the states were upset over the malfunctioning of GST Network - the IT backbone of the GST regime - Jaitley said GSTN was facing only transient issues which have been subsequently rectified.
Among the services, jobs works contract except in gold under the threshold of Rs 20 lakh was exempted from GST. The same holds true for artisans of the country.
The tax rate on government work contract was reduced to 12% from 18%.
The council corrected a major anomaly on luxury and other vehicles by hiking the cess to 7% on SUVs and 5% on big cars, including luxury cars.
“Large cars got a GST advantage of 8% but the cess has been increased only by 5% on them, which is still cheaper than the pre-GST era,” Jaitley said, adding that small category diesel and petrol cars have been exempted from additional cess.
“It was decided by the GST Council that let consumers get the benefit of price reduction on small cars. So we maintained a status quo on that,” the minister said.
To a question on why the council decided to hike the tax on big cars only by 5%, Jaitley said, “The government has to balance its revenue raising with Make in India”.
Two days ahead of the GST Council meeting, the representatives of vehicle manufacturing bodies had conveyed to the government that the move would impact their future plan of expansion under the Make in India initiative.
The council, on a request by the Telangana government for a further reduction on tax on development projects, agreed to expand the definition of "Contract Works".
Over 150 delegates, including senior government officials, attended the meeting held at the Hyderabad International Convention Centre.