GST Council removes tax exemptions on some items

On day 1 of the GST council meet, the panel removes GST exemptions on services including pre-packaged and labelled food and hotel rooms under Rs 1,000

GST council meet

The GST Council on Tuesday approved changes in the tax rates on some goods and services with a view to rationalising the levy even as non-BJP ruled states set the stage for a possible confrontation with the Centre over the issue of a larger share in tax revenues.

On Day 1 of the two-day meeting of the panel headed by Union Finance Minister Nirmala Sitharman and comprising of representatives of all states and UTs, a host of procedural compliance-related issues for GST-registered businesses was discussed, officials said.

It also accepted most of the recommendations of a group of ministers which suggested the withdrawal of GST exemption on some services among others. Here are the items that will attract GST now.

The Council in its Tuesday meeting cleared a report of the group of state finance ministers which suggested a 5 per cent GST on ‘pre-packaged and labelled’ curd, lassi, puffed rice and wheat flour, which are usually produced by large manufacturers.

Besides, a 12 per cent tax on hotel rooms below Rs 1,000/day will be levied, as against tax-exempt currently.

A 12 per cent tax will be levied on maps and charts including atlases. An 18 per cent GST will be levied on fees charged by banks to issue cheque books or loose cheques.

Currently, a 5 per cent GST is levied on branded and packaged food items, while unpacked and unlabelled items are tax exempt.

It also recommended correction in inverted duty structure for a host of items, including edible oil, coal, LED lamps, printing/drawing ink, finished leather and solar water heater.

The report of the state finance ministers on GST systems reforms, which recommended biometric authentication of high-risk taxpayers and real-time validation of bank accounts too was cleared by the Council.

Rate rationalisation is important to boost the weighted average GST rate that has fallen to 11.6 per cent against 14.4 per cent at the time of the launch.

As per the data on revenue growth collated for the Council meeting, only five out of 31 states/UTs — Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim — registered a revenue growth higher than the protected revenue rate for states under GST in 2021-22.

Also Read: GST Council did not recommend reducing GST on health insurance: FM

With regard to e-way bill on intra-state movement of gold, gold jewellery and precious stones to check evasion, the Council recommended that states can decide on the threshold above which the electronic bill is to be made mandatory.

A panel of state ministers had recommended the threshold to be Rs 2 lakh and above.