The Goods and Services Tax Council on Friday decided to increase the tax rate on caffeinated drinks, Business Today reported. There had been a proposal to increase the tax rate on these drinks from 18% to 28%. Finance Minister Nirmala Sitharaman said the tax rate has been increased to 28%, with a 12% cess.
Sitharaman said hotels with tariffs of up to Rs 1,000 per night will be exempted. Hotels charging between Rs 1,001 and Rs 7,500 per night would be levied 12% tax as against the existing 18%. Tax on room tariff of above Rs 7,500 has been slashed to 18% from the existing 28%. Outdoor catering will also attract 5% tax as against the existing 18% with input tax credit. Sitharaman said that the GST Council has recommended a lower 12% cess on 1,500 cc diesel engine and 1,200 cc petrol engine vehicles with a carrying capacity of up to 13 people, The Hindu reported.
“GST rate on slide fasteners has been reduced from 18% to 12%, marine fuel 18% to 5%, 12% to 5% on wet grinders consisting of stone as a grinder, and 5% to zero on dried tamarind,” Sitharaman said at a press conference following the council meeting, ANI reported.
The finance minister said several decisions had been taken to promote tourism. She added that railway wagons, coaches and rolling stocks will now be taxed at 12% instead of 5%. Woven and non-woven polythene bags will now attract a uniform tax rate of 12%, the finance minister said.
Sitharaman announced that defence goods not being manufactured indigenously will not attract any GST. Supply of silver and platinum from specified agencies has also been exempted. She also said that jewellery exports will now attract zero percent GST, The Hindu reported. The council also abolished the rate levied on cut and polished semi precious stones. The council, headed by Sitharaman, also ruled out a reduction in the rate of tax on biscuits.
The finance minister said that supply of goods and services to the International Federation of Association Football (FIFA) and other specified persons will be exempted for the Women’s Under-17 World Cup, which is to be held in India.
Group insurance schemes for paramilitary forces under the Ministry of Home Affairs will be exempted from tax, the council announced.
The meeting, held in Goa, was attended by Minister of State for Finance and Corporate Affairs Anurag Thakur and finance ministers of states. The meeting took place hours after Sitharaman announced that the corporate tax rate would be reduced from 35% to 22%, to boost a struggling economy that grew at 5.8% in the April to June 2019 quarter.
Domestic companies will now have an option to pay 22% tax, provided they do not avail of other incentives or exemptions. New domestic manufacturing companies can pay 15% corporate tax with the same condition, if they are incorporated on or after October 1, 2019, and start production no later than March 31, 2023. The government will forgo a revenue of Rs 1.45 lakh crore per year, Sitharaman said.
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