In a bid to bring a relief to tax payers, especially for aam aadmi, the newly-formed all powerful Goods and Services Tax (GST) Council is likely to announce affordable tax rates by lowering GST on a number of commonly-used items.
Besides, it is also expected that the Council may hike the quantum of cess on luxury and mid-size cars in its 21st meeting which is scheduled to be held at Hyderabad on Saturday.
According to officials, GST on over two dozen products, including commonly-used food items like idli, dosa batter, dried tamarind, custard powder and kitchen accessories like gas lighter and others, will be lowered after some tax anomalies were found in their fixations.
“Besides car cess hike and tax on some commonly-used items, various issues concerned with traders and business houses by States are likely to be taken up at the Saturday’s meeting. The GST Council will also take up some IT-related issues in the GST network which has faced glitches,” they said.
It is, however, learnt that the GST Council, chaired by Finance Minister Arun Jaitley and comprising his State counterparts, will be seriously looking into issues on anti-profiteering business in which the Council will formulate a mechanism to deal with their business that are deregistering their brands to avoid taxes after the rollout GST from July 1.
Unbranded food items are exempted from GST, whereas branded and packaged food items attract 5 per cent rate. Hence, many businesses are deregistering their brands to avoid the levy.
As far as car cess is concerned, it will take centrestage in the meeting and the quantum of hike in cess on a range of cars from mid-sized to hybrid variants would be finalised in the meeting. The Council had in its last meeting on August 5 approved hike in cess on mid, large size cars, SUVs, hybrid and luxury ones to up to 25 per cent, from 15 per cent. An Ordinance to hike the cess rate has been promulgated and the Council will now look at the quantum of hike.
Even as automakers protested the hike and demanded to bring down the cess to a comfort level, but the Council is likely to go ahead to rectify the anomaly where rates of certain common-use items had gone up but luxury cars were costing less under the new regime.
Car prices had dropped by up to Rs 3 lakh following the implementation of the GST from July 1. This cess has been hiked to up to 25 per cent now on certain categories. Also a new category has been introduced in the Act wherein motor vehicles which have capacity to transport up to 13 persons would attract 25 per cent cess.
The highest pre-GST tax incidence on motor vehicles worked out to about 52-54.72 per cent, to which 2.5 per cent was added on account of Central Sales Tax and octroi.
Against this, post-GST the total tax incidence came to 43 per cent. Under the GST regime, which replaced over a dozen Central and State levies in the biggest tax reform since Independence, cars attract the top tax rate of 28 per cent or above. On top of this, a cess of 1 to 25 per cent has been levied for the creation of a corpus to compensate States for any loss of revenue from implementation of GST.
It is also expected that various States are likely to raise the issue of the technology backbone prepared by GST Networks (GSTN) and how the maiden return filing fared.
Due to huge rush of July GSTR-3B return filing on the penultimate date, the GSTN software had witnessed some glitches and the last date of filing had to be extended. Also, the date of final return filing for GSTR-1 was extended to September 10 in view of rush in invoice uploading.