Updates on the Revised Goods and Services Tax (GST) Rates for 2022 - Taxonomy

In a recent meeting chaired by Finance Minister Nirmala Sitharaman, the Goods and Services Tax (GST) Council approved several changes to the tax rates, encompassing both hikes and exemptions. Notably, casinos, online gaming, and lotteries will now face a 28% GST, despite concerns, and the compensation window for states was not extended.

Affected Categories and Revised Rates:

1. 1. Leather Products, Textiles, and Solar Water Heaters: The GST on these items has been adjusted to a range of 5–12%.
2. 2. LED Lights and Printing/ Writing Ink: Both now attract an 18% tax.
3. 3. Hotel Rooms: Rooms priced at INR 5,000 per day (excluding intensive care units) are subject to a 5% tax without input tax credit.
4. 4. E-waste:The GST on electronic waste now falls within the range of 5–18%.
5. 5. Various Items: Coffee beans, unprocessed green tea leaves, wheat bran, and de-oiled rice bran now carry a 5% tax.

Proposed Changes and Council’s Decision:

The GST Council is seeking input from states on potential rate hikes for 143 items, with approximately 92% of them proposed to move from the existing 18% tax slab to the top 28% slab. This move is seen as part of an ongoing effort to rationalize rates and bolster government revenues.

Future Changes:

There are discussions within the GST Council about reforming the 5% rate, potentially eliminating it to boost state government revenue. The proposal suggests moving some mass-consumption goods to 3% and others to 8%. Luxury items would attract the highest tax under this scheme.

Taxation for Coaching Institutions:

The Central Board of Indirect Taxes and Customs (CBIC) has mandated coaching institutions to pay an 18% GST on their bundled supplies and services to students, known as their composite supply. This move aims to address issues where institutions were depositing GST on individual items at comparatively lower rates.

Textile Rate Hike Deferred:

Despite initial proposals, the GST Council, in its 46th meeting, decided to defer the rate hike on textiles from 5% to 12%. This decision follows opposition from states like West Bengal, Gujarat, Delhi, Tamil Nadu, and Rajasthan, citing concerns about the impact on MSMEs and affordability of clothing for the common man.

Conclusion:

In conclusion, these recent updates on GST rates underscore the ongoing efforts to streamline taxation policies in India, impacting various sectors and industries. Stay informed for further developments, and for any assistance with tax-related matters, rely on Taxonomy, your trusted partner in financial compliance and consultation.