Rationalization of GST- Slashing of the 28% tax bracket.

Rationalization of GST- Slashing of the 28% tax bracket.

Author: Shrestha Banerjee, NLU, Assam.

The 31st   GST Council brought much relief of the middle class, the GST council on Saturday, 22 December 2018, as it depreciated the tax slabs on 23 commonly used goods and services, making them more affordable to the masses. Further, goods such as frozen and preserved vegetables were completely exempted from the tax levy.

With this, they rationalized the 28 percent slab by bringing down the GST on seven items of regular use, leaving 28 items on the 28 % tax bracket, which mostly comprise of luxury goods.

Goods on which the tax levy has been slashed from twenty-eight to eighteen percent include pulleys, transmission shafts, gearboxes, cranks, monitors and TV screens measuring up to 32 inches, re-treaded and used pneumatic rubber tyres, power banks of lithium-ion batteries which will bring them in co-existence with the already existing lithium-ion batteries in the 28 % tax slab, video recorders and digital cameras and video game consoles under the HS Code of 9504. Further, the accessories meant for the locomotion of disabled people have straightaway been slashed down from 28-5 percent. Some goods like music books have been completely stroked out of the GST bracket, from 12 percent to nil. GST rate on cinema tickets above Rs. 100 shall be reduced from 28% to 18% and on cinema tickets up to Rs 100 from 18% to 12%.

The Goods and Service Tax Act was first passed in the Parliament on 29th March 2017, under the central government headed by prime minister Narendra Modi and the Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. Accordingly, the constitution’s one hundred and first Amendment Act, 2015

France is the first country which has implemented this uniform tax regime in 1954, in his administration.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. The law of GST has replaced many indirect tax laws that previously existed in India and centralized the taxation system, paving a way to the implementation of one indirect tax for the entire country.

Under the GST regime, the tax will be levied at every point of sale. In the case of intra-state sales, Central GST and State GST will be charged. Inter-state sales will be chargeable to Integrated GST. This makes GST a purely multi-stage, destination-based tax. One major credit of charging the tax at each stage of the supply is that it will avoid the transaction and acceptance of black money among the shopkeepers, wholesalers, increase accountability and reduce the entire tax load which was earlier borne by the final stage receiving an end of the supply chain, i.e. the customers.  Etc.

However, it seemed that the GST wasn’t well received by especially the commons folk and the working classes of India who witnessed a price hike owing to higher taxes. Additionally, many luxury goods and services, like visiting restaurants and buying movie tickets were now costlier because as luxury goods, they, higher GST was levied on them.

The finance minister Arun Jaitley said that the rationalization of GST is still under process and the periphery of the 28% tax bracket will gradually wane as more goods are dispelled from that margin.