47th GST Council Meet: Exemption on Some Items Gone, Tax on Casinos Deferred

The revenue secretary said that the changes in tax rates will come into effect from 18 July.

Union Finance Minister Nirmala Sitharaman

(Photo: PTI)

After its 47th meeting, the GST Council on Wednesday, 29 June, decided to increase the tax rates on certain goods and services while withdrawing tax exemptions on certain items like pre-packaged foods, which are consumed on a large scale.

Recommendations for the said changes were made by the Group of Ministers (GoM) headed by Karnataka CM Basavaraj Bommai, who submitted a report on tax exemptions and corrections of inverted duty structure.

Tarun Bajaj, the revenue secretary, said that these changes will come into effect from 18 July.

Items That Are Set To Get Costlier

• Packaged food like pre-packed curd, lassi, and buttermilk will now attract GST. "Hitherto, GST was exempted on specified food items, grains etc when not branded, or right on the brand has been foregone. It has been recommended to revise the scope of exemption to exclude from it prepackaged and pre-labelled retail pack in terms of Legal Metrology Act, including pre-packed, pre-labelled curd, lassi and butter milk," said the council in a press release.

• Hotel Rooms, under Rs 1,000 per day, which are not taxed at present, will attract 12 percent GST.

• An 18 percent GST will be levied on items like bank cheque books and printed maps (hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes). Currently, these items are not under the ambit of GST.

• Post office services will now be taxed. An exception, however, has been provided for postcards and inland letters, book posts, and envelopes weighing less than 10 gm.

• Room rent (excluding ICU) exceeding Rs 5,000 per day per patient charged by a hospital, shall be taxed to the extent of amount charged for the room at 5 percent without ITC (Input Tax Credit).

• Prices of LED lights and lamps, fixtures, and their metal printed circuit boards will surge as the council has approved the recommendation to increase their GST from 12 percent to 18 percent.

• Rates of printing, writing, and drawing ink are also set to increase as 18 percent GST will be levied on them, as against the current rate of 12 percent.

• GST of knives along with cutting blades, paper knives, pencil sharpeners and blades, spoons, forks, ladles, skimmers, cake-servers, etc, is also going to go up from 12 percent to 18 percent.

• Power-driven pumps primarily designed for handling water such as centrifugal pumps, deep tube-well turbine pumps, submersible pumps, and bicycle pumps, will also see a GST surge from 12 to 18 percent.

• Machines for cleaning, sorting, or grading seeds and grain pulses, machinery used in the milling industry or for the processing of cereals, etc, pawan chakki or air-based atta chakki, and wet grinders will now attract 18 percent GST as opposed to the current 5 percent GST.

• Besides machines used for cleaning, sorting and grading eggs, fruit, or other agricultural produce, milking machines and dairy machinery will also cost more as their GST is being spiked from 12 percent to 18 percent.

Items That Are Set To Get Cheaper

• Ropeway Rides: The GST Council has brought down the tax on ropeway rides from 18 percent to 5 percent.

• Rent of goods carriage: The renting of trucks or goods carriages when cost of fuel is included, is set to become cheaper as its GST is set to go down from 18 percent to 12 percent.

• Ostomy Appliances: GST for these appliances are set to reduce from 12 percent to 5 percent.

• Orthopaedic Appliances: Items like splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried or implanted in the body to compensate for a defect or disability; and intraocular lens will become cheaper as their GST is set to drop from 12 percent to 5 percent.

• Defence Items: IGST on specified defence items imported by private entities/vendors, when the end-user is the defence forces, has been exempted.

Other Highlights of the GST Council Meeting

The council also did not take any decision on the request put forth by multiple states on extending the mechanism to compensate them for revenue lost from the implementation of GST, beyond 30 June.

About a dozen states, cutting across party lines, had sought for the extension.

Speaking to reporters about the two-day meeting of the council in Chandigarh, Union Finance Minister Nirmala Sitharaman said finance and other ministers of 16 states spoke on the compensation issue.

Of the 16 states, 3-4 spoke of evolving their own revenue stream to break from the compensation mechanism, she said.

The Centre did not reveal its mind on the issue.

When a nationwide Goods and Services Tax (GST) subsumed 17 central and state levies from 1 July 2017, it was decided that states will be compensated for any loss of revenue from the new tax for five years. That five-year term is ending on 30 June. With two years being lost in the pandemic, states have sought an extension of this compensation mechanism.

The GST Council is the highest decision-making body of the indirect tax regime. It is headed by the Union finance minister and comprises representatives of all states and UTs.

Council Defers Decision on 28 Percent GST for Casinos, Online Gambling

The GST Council on Wednesday also deferred its decision on levying a 28 percent tax on casinos, online gaming, horse racing, and lottery, pending more consultations with stakeholders, Sitharaman said, adding that Goa and some other states wanted to make more submissions.

A group of ministers headed by Meghalaya Chief Minister Conrad Sangma, has been asked to consider submissions of stakeholders again on the valuation mechanism and submit its report by 15 July, she told reporters.

Next Council Meet To Be Held in August

The council will meet again in the first week of August to decide on the issue, she said. After an invite from Tamil Nadu Finance Minister P Thiaga Rajan (PTR), the meet is set to be held in Madurai.

The GoM (Group of Ministers) had recommended that online gaming should be taxed at the full value of the consideration, including the contest entry fee paid by the player on participating in the game.

In case of race courses, it had suggested that GST be levied on the full value of bets pooled in the totalisators and placed with the bookmakers. It also recommended that no distinction should be made on grounds of game of skill or game of chance for the purpose of the levy of GST, which should be taxed at the highest rate of 28 percent.

On rate rationalisation measures, the council has given three more months time for the corresponding GoM to submit its report.

(With inputs from PTI and Livemint.)