Mirth of GST revision

With the GST Council accepting the Centre's recommendations for rate revision, people are welcoming the significant reduction in tax on everyday items with great relief and joy. This is nothing short of a Diwali gift for Indians and an Onam gift for Keralites.

The Goods and Services Tax was reduced from four slabs to two. From now on, there will be only two slabs, 5% and 18%. The 12% and 28% tax slabs have been abolished. The items included in the abolished slabs have been shifted to 5% and 18% slabs or eliminated. The price reduction will come into effect from September 22.

The long-standing demand for the removal of the 18 per cent tax applicable on individual health life insurance premiums was fully accepted this time. With the medicines, surgical instruments, bandages, and glucometers coming under the five per cent slab, the cost of medical treatment is expected to become cheaper. This is a major overhaul after the introduction of GST. Although states, including Kerala, have demanded compensation due to the loss of revenue, it is commendable that the central government delivered something beneficial for India’s commoners and will possibly keep our economy robust. Prime Minister Modi had hinted at this in his Independence Day speech at the Red Fort a few weeks ago.

The 56th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, took an important decision to eliminate two slabs. 40 per cent tax has been imposed on luxury goods, narcotics, tobacco products and lottery. The increase in GST on lottery from 28 per cent to 40 per cent is a setback for Kerala. State Finance Minister K.N. Balagopal expressed concern over this decision affecting the livelihoods of tens of thousands of people who sell lottery.

If the price of lottery tickets is maintained with the tax increase, there may be a reduction in agent commission and prize money. Kerala can still submit this demand to the Centre with reasons and figures.

The tax on hotel accommodation with a room rate of less than Rs 7500 has been reduced from 12 per cent to 5 slabs. This will be useful in giving a new impetus to the tourism sector. The prices of TVs, small cars, bikes below 350 cc, ACs, autorickshaws, and washing machines will also be reduced. This will be a great relief for middle-class families.

The reforms will come into effect only after Onam, but the joy is already here.