The Goods and Services Tax (GST) Council announced following a lengthy two-day meeting that ended on Wednesday that tax increases will begin to take effect on July 18 for over two dozen goods and services, including unbranded food items, curd, and buttermilk as well as low-cost hotels, checks, and maps. In addition, tax rates will be eliminated for items imported by private vendors for use by the armed forces and reduced for a number of goods and services, such as ropeways and truck rentals that include fuel costs.
More than a dozen States requested the GST compensation be extended at the meeting.
In order to resolve anomalies brought on by inverted duty structures, where tax rates on inputs were higher than those on outputs, the GST levies were increased for 17 items and services, including LED lights, solar water heaters, and writing inks. In addition, cut and polished diamonds will now be subject to GST at 1.5 percent rather than the previous 0.25 percent, and the tax rate on Tetra Pak has been increased from 12 to 18 percent.
Revised tax rates announced by the GST Council after a marathon two-day meet that concluded on Wednesday:
|
Good and Services |
From |
To |
|
Knives, spoons, forks, and ladles |
12% |
18% |
|
LED lamps and lights |
12% |
18% |
|
Water pumps, deep tube-well turbine pumps, submersible pumps |
12% |
18% |
|
Solar water heater and syst4ems |
5% |
12% |
|
Dairy machinery |
12% |
18% |
|
Work contract for roads, railways, metro, monuments, canals, dams, educational institutions, and hospitals |
12% |
18% |
|
Ostomy appliances |
12% |
5% |
|
Orthopaedic appliance for splints and fractures, and intraocular lens |
12% |
5% |
The GST rate will be lowered from 12 percent to 5 percent for ostomy appliances, intraocular lenses for people with poor eyesight, and splints used to heal fractures. The Council has also made it clear that stem cell preservation services will no longer be exempt from paying taxes, but assisted reproductive technology and in vitro fertilization (IVF) services are still considered health care services for the purposes of the GST exemption. Except for patients in intensive care units, hospital room rentals over 5,000 per day will henceforth be subject to a 5 percent tax.
According to suggestions made by a group of ministers (GoM) chaired by Union Finance Minister Nirmala Sitharaman and headed by Karnataka Chief Minister Basavaraj Bommai and agreed in "toto" by the Council, exemptions and concessional prices on a number of commodities will be eliminated.
High Inflation:
In response to worries that the increases to the GST rate would contribute to the current high inflation, Sitharaman noted that everyone was concerned about inflation and that the Council's decisions were not made in a vacuum.
She stated that "the elected representatives who are a part of the Council are aware of inflation." Sitharaman, who presided over the first "normal" meeting of the Council since September 2021, noted that this meeting also evaluated the recommendations of three other ministerial groups, of which two had been ratified.
