GST Council may prune 28% tax bracket in July 21 meet: report

The 28th session of the Goods and Service Tax (GST) Council on July 21st may witness a reduction of tax rates on items like paint, cement, marble, tiles, and digital cameras; bringing these items from the 28 per cent tax bracket to 18 per cent. This comes in the backdrop of intense lobbying done by industry players for the rate reduction.

A government official, as reported in the Business Standard, said, "We have received a representation for a reduction in rates from cement, paint, construction items, and digital cameras. We are examining whether and to what extent it is feasible in line with revenue considerations."

Technology companies like Nikon, Canon, and Sony, amidst stiff competition from smart-phones, had made representations to the government to reduce rates on digital cameras to 18 per cent from 28 per cent. They additionally cited that in most Asian countries, digital cameras are taxed between 7 - 17 per cent.     

On November 10th, the GST Council had slashed tax rates on around 178 items, moving them from the top bracket to 18 per cent or lesser. After the pivotal move, close to 50 items were left in the 28 per cent bracket. If the government gives in to the demands of the lobbyists, it would lead to further trimming down of the 50 items.       

Piyush Goyal, who took over as the officiating Finance Minister after the kidney transplant of Finance Minister Arun Jaitley will likely be chairing the meeting of the GST Council for the first time.

According to estimates, the rate cut may result in a revenue loss of Rs 2,500 crore per month to the government. As reported in the Business Standard, the cement industry currently secures Rs 6,000 crore in revenue per month for the government. "At this point, the revenue flow is of prime importance. Forgoing that much revenue at this point may not be feasible,"said a government official.

Meanwhile, the GST Council may also give its nod to include 'natural gas' and 'aviation turbine fuel' under the nascent tax regime. Petrol and diesel, however, will continue to burn a hole in peoples pockets as the government has no immediate plan to include it under GST.