The key decision-making body for all GST related matters, the Goods and Services Tax (GST) Council has decided to slash the tax rates of 22 items. Out of 22 items, seven were from the highest slab of 28 per cent.
Cement and Automobile which contributes for a large part of the revenue from taxes still remain within the 28 per cent bracket. Union Finance Minister Arun Jaitley said that the rate cuts would result in the government exchequer taking a hit of Rs 5,500 crore for the full year.
Prime Minister Narendra Modi had pledged to retain luxury or sin items in the highest slab, automobile components, and cement will still remain in the 28 per cent slab for the time being. Arun Jaitley reaffirmed that a 10 per cent rate cut in these two items would make a big hole in the governments pocket. "The Council felt this is too steep at this moment," he added.
The six items moved from 28 per cent to 18 per cent brackets include 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.
Giving a big relief for divyangs, parts of carriages for disabled people which were earlier taxed at 28 per cent were reduced to five per cent. Tax in the movie tickets costing up to Rs 100 was cut down to 12 per cent from existing 18 per cent; moreover, tickets costing more than Rs 100 will now attract 18 per cent GST against 28 per cent earlier.
"On behalf of the Indian film industry, I would like to thank the government for taking this progressive step," said Siddharth Roy Kapur, the president of Producers Guild of India.
"We look forward to continuing to engage with the government on initiatives that will help to unleash the full potential of the film industry. Cinema can be a significant instrument of Indian soft power around the world while continuing to act as a uniting force for all Indians — a role it has played for more than a century," he added.
In another major decision, the council exempted the frozen and provisionally preserved vegetables from GST.