The GST Council will discuss a plan to slash levies on a host of products including cement, mass-consumption services such as salon and beauty parlours as well as individual life and health insurance plans when it meets early next month.
Also on the agenda for the meeting, will be a proposal to move all food and textiles products into the 5 per cent slab as part of a move to simplify the tax regime and end all classification concerns, sources told TOI.
The levy on cement is proposed to be reduced from 28 per cent to 18 per cent, sources said, in what will address a long-pending demand from the construction and infrastructure sectors with the building material being a key input.
The move is expected to reduce costs for end consumers, provided the industry, which has often faced cartelisation charges, passes on the benefit of lower taxes.
“Government does not want to put in thresholds and other classification to ensure that there is as little confusion or interpretation,” said a source.
The government is also evaluating if levies on some of the commonly used services can be lowered from 18 per cent to 5 per cent. While the small salons are exempted, the mid and higher-end ones face 18 per cent GST which is ultimately borne by consumers.
Similarly, in the case of term assurance and health insurance policies purchased by individuals, GST will be zero, a move that is expected to not just ensure critical cover but also increase penetration of the service to cover a larger share of the population.
The GST Council, headed by finance minister Nirmala Sitharaman, with all states as members, is due to meet on Sept 3 and 4 to decide on a shift to fewer slabs – 5 per cent and 18 per cent for most goods and services, and 40 per cent for a handful of sin and luxury items.
While there have been suggestions from states such as West Bengal to increase the GST ceiling from 40 per cent, sources said that the move will send a wrong signal, apart from requiring major amendments to the law.
The Centre is of the view that small cars – with length up to 4 metre – will face 18 per cent tax and the bigger ones will attract 40 per cent levy, again lower than the current 50 per cent (28 per cent GST plus 22 per cent cess).
“When GST was introduced, it was important to ensure that the rates remained revenue neutral but based on eight years of experience, we have to move to a new simple regime that balances the interests of consumers as well as the exchequer,” said an official.
Source #ET
