The government on Saturday announced cut in goods and services tax (GST) on several daily use items - with exemption on sanitary napkins and rakhis - besides simplification of compliance processes, in a move to benefit consumers and small scale industries.
Sanitary napkins are taxed at 12 per cent under the one-year old GST regime, which attracted serious criticism from various quarters.
The interim Finance Minister also pointed out that the GST Council will not only be driven by revenue collection, but will also take into account aspects like employment generation and GDP growth while taking decisions.
Sanitary napkins that were taxed at 12% earlier, has been put under the exempted category following widespread demand on the essential commodity. GST rates on several consumer goods including refrigerators, lithium batteries, vacuum cleaners, grinders, mixers, food processors, water heaters, hair dryers, water coolers, ice cream freezers, scents, perfumes, powder puffs, cosmetics, and electric ironing machines have been cut to 18 percent from 28 percent.
The value limit of footwear was enhanced from Rs 500 to Rs 1,000 for 5 per cent rate.?
Fortified milk has also been fully exempted from GST. "Besides revenue collection, the GST council will now focus on job creation as well", Goyal said.
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Among other tax-reduction decisions, Goyal said, tax rate on handicraft items such as handbags, pouches and purses, jewellery box, wooden frames of paintings and photographs among others have been brought under the 12 percent slab, from 18 percent.
Mr Goyal said, traders with turnover up to 5 crore rupees will deposit GST monthly but they have to file the returns quarterly. Since its launch last July, the GST Council has reduced rates on over 320 items and with Saturday's reduction, the number will swell by nearly a third. Two new simpler return formats have also been approved.
"A deifinite timeline will be declared once we are informed about it by the GST Network", Goyal said.
The finance minister also said the GST Council has chose to focus on issues concerning the broader economy such as job creation rather than only on revenue targeting.
Amendments such as the omission of liability to pay tax on the reverse charge, enabling new return filing procedures, allowing more service providers to opt for composition scheme, among others has been suggested.The amendments in the Central GST (CGST) Act, 2017 will now have to be cleared by the Cabinet and will ultimately require the Parliament's nod.
The decisions taken on Saturday were aimed at simplification, rationalisation and relief for small business, Goyal said.