New Delhi, Dec 31: Goods And Services Tax was a long awaited tax reform, which finally see the light of the day in Narendra Modi’s regime on July 1. The GST was launched amid much fan-fare in a midnight function at Parliament’s central hall. The Congress party boycotted saying it was implemented in a hurry and it was not what the UPA government had envisaged. Finance Minister Arun Jaitley warned about teething trouble early on– which still exist as the year comes to an end.

The Goods and Services Tax was implemented from July 1. The original idea was to replace a gamut of taxes with one single tax– divided between Centre and states. However, the Modi government brought the tax under five slabs– 0%, 5%, 12%, 18%, 28%.

The teething troubles slowed the Indian economy as traders were confused about various provisions of the tax. The GDP growth tanked to 5.7 per cent in the first quarter of financial 2017-2018. The government defended that it was not the impact of GST– but experts said that both demonetisation and GST contributed to it. Later, RBI also mentioned about the adverse impact of GST on growth. The government finally relented. The GST council later decided to keep the highest 28% tax on on luxury and sinful items–177 items were shifted to the 18% bracket from the 28% slab.

Goods on which the Council has recommended reduction in GST rate from 28% to 18% include:

  • Wire, cables, insulated conductors, electrical insulators, electrical plugs, switches, sockets, fuses, relays, electrical connectors
  • Electrical boards, panels, consoles, cabinets etc for electric control or distribution
  • Particle/fibre boards and ply wood. Article of wood, wooden frame, paving block
  • Furniture, mattress, bedding and similar furnishing
  • Trunk, suitcase, vanity cases, brief cases, travelling bags and other hand bags, cases
  • Detergents, washing and cleaning preparations
  • Liquid or cream for washing the skin
  • Shampoos; Hair cream, Hair dyes (natural, herbal or synthetic) and similar other goods; henna powder or paste, not mixed with any other ingredient;
  • Pre-shave, shaving or after-shave preparations, personal deodorants, bath preparations, perfumery, cosmetic or toilet preparations, room deodorisers
  • Perfumes and toilet waters
  • Beauty or make-up preparations
  • Fans, pumps, compressors
  • Lamp and light fitting
  • Primary cell and primary batteries
  • Sanitary ware and parts thereof of all kinds
  • Articles of plastic, floor covering, baths, shower, sinks, washbasins, seats, sanitary ware of plastic
  • Slabs of marbles and granite
  • Goods of marble and granite such as tile
  • Ceramic tiles of all kinds
  • Miscellaneous articles such as vacuum flasks, lighters,
  • Wrist watches, clocks, watch movement, watch cases, straps, parts
  • Article of apparel & clothing accessories of leather, guts, furskin, artificial fur and other articles such as saddlery and harness for any animal
  • Articles of cutlery, stoves, cookers and similar non electric domestic appliances
  • Razor and razor blades
  • Multi-functional printers, cartridges
  • Office or desk equipment
  • Door, windows and frames of aluminium.
  • Articles of plaster such as board, sheet,
  • Articles of cement or concrete or stone and artificial stone,
  • Articles of asphalt or slate,
  • Articles of mica
  • Ceramic flooring blocks, pipes, conduit, pipe fitting
  • Wall paper and wall covering
  • Glass of all kinds and articles thereof such as mirror, safety glass, sheets, glassware
  • Electrical, electronic weighing machinery
  • Fire extinguishers and fire extinguishing charge
  • Fork lifts, lifting and handling equipment,
  • Bull dozers, excavators, loaders, road rollers,
  • Earth moving and levelling machinery,
  • Escalators,
  • Cooling towers, pressure vessels, reactors
  • Crankshaft for sewing machine, tailor’s dummies, bearing housings, gears and gearing; ball or roller screws; gaskets
  • Electrical apparatus for radio and television broadcasting
  • Sound recording or reproducing apparatus
  • Signalling, safety or traffic control equipment for transports
  • Physical exercise equipment, festival and carnival equipment, swings, shooting galleries, roundabouts, gymnastic and athletic equipment
  • All musical instruments and their parts
  • Artificial flowers, foliage and artificial fruits
  • Explosive, anti-knocking preparation, fireworks
  • Cocoa butter, fat, oil powder,
  • Extract, essence ad concentrates of coffee, miscellaneous food preparations
  • Chocolates, Chewing gum / bubble gu
  • Malt extract and food preparations of flour, groats, meal, starch or malt extract
  • Waffles and wafers coated with chocolate or containing chocolate
  • Rubber tubes and miscellaneous articles of rubber
  • Goggles, binoculars, telescope,
  • Cinematographic cameras and projectors, image projector,
  • Microscope, specified laboratory equipment, specified scientific equipment such as for meteorology, hydrology, oceanography, geology
  • Solvent, thinners, hydraulic fluids, anti-freezing preparation

Goods on which the Council has recommended reduction in GST rate from 28% to 12% are:

  • Wet grinders consisting of stone as grinder
  • Tanks and other armoured fighting vehicles

Other changes/rationalisation of GST rates on goods:

a) 18% to 12%

i. Condensed milk

ii. Refined sugar and sugar cubes

iii. Pasta

iv. Curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasoning

v. Diabetic food

vi. Medicinal grade oxygen

vii. Printing ink

viii. Hand bags and shopping bags of jute and cotton

ix. Hats (knitted or crocheted)

x. Parts of specified agricultural, horticultural, forestry, harvesting or threshing machinery

xi. Specified parts of sewing machine

xii. Spectacles frames

xiii. Furniture wholly made of bamboo or cane

b) 18% to 5%

i. Puffed rice chikki, peanut chikki, sesame chikki, revdi, tilrevdi, khaza, kazuali, groundnut sweets gatta, kuliya

ii. Flour of potatoes put up in unit container bearing a brand name

iii. Chutney powder

iv. Fly ash

v. Sulphur recovered in refining of crude

vi. Fly ash aggregate with 90% or more fly ash content

c) 12% to 5%

i. Desiccated coconut

ii. Narrow woven fabric including cotton newar [with no refund of unutilised input tax credit]

iii. Idli, dosa batter

iv. Finished leather, chamois and composition leather

v. Coir cordage and ropes, jute twine, coir products

vi. Fishing net and fishing hooks

vii. Worn clothing

viii. Fly ash brick

d) 5% to nil

i. Guar meal

ii. Hop cone (other than grounded, powdered or in pellet form)

iii. Certain dried vegetables such as sweet potatoes, maniac

iv. Unworked coconut shell

v. Fish frozen or dried (not put up in unit container bearing a brand name)

vi. Khandsari sugar

With these measures and rate cuts, the government revived the GDP growth. It improved by 6.3 per cent, but the revenue saw a sharp fall. In November, the GST collected was the lowest–Rs 80,808 crore. It was Rs 83,364 crore in October, Rs 92,150 crore for the month of September, Rs 90,669 crore for August and Rs 94,063 crore in July. Government hopes to do away with these teething troubles in 2018 and improve the dwindling revenue stream.