New GST Rates:The Goods and Services Tax (GST) Council in its 47th meeting implemented a number of rate changes to correct the inverted duty structure and remove some exemptions, which may have served as a lead up to future rate rationalisation and general tweaking of tax slabs which would be effective w.e.f 18 July 2022. 

In the revised changes, the GST exemption on ‘Pre Packaged’ and ‘labelled’ retail packs has been withdrawn but unlabeled and loose and unlabeled still remain exempted from GST. 

The GST Council has also recommended 4 ministerial panels – on rate rationalisation,   on movement of gold and precious stones,  system reforms, and  casinos, horse racing and online gaming.

The report which was presented by the Group of Ministers (GOM) included correction of inverted duty structure and withdrawal of exemptions. The group has been given time till July 13 to further work on tax slabs changes and rate rationalisation. 

A 28 percent uniform tax slab has been finalized on casinos, racing and lottery. 

Effect on Taxpayers 

Companies anticipate raising prices for products used frequently, like LED lamps, and for packaged foods, like wheat flour, paneer, curd, and lassi. This is expected to raise concerns about inflation. A 12% tax rate on hotels with tariffs less than Rs 1,000 per day is expected to have an impact on the tourism sector in non-metro cities, according to state government officials. The overall retail inflation rate based on the Consumer Price Index, on the other hand, is unlikely to be significantly affected because the weight age of these items in the index is low.

Solar water heater and system, prepared/finished leather/chamois leather / composition leathers, Job work in relation to manufacture of leather goods and footwear, work contract supplied to central and state governments, union territories & local authorities involving predominantly earthwork and sub-contracts thereof, Petroleum/Coal bed methane are set to become costlier as the GST rate has been increased on these goods and services from 5% to 12%.

Printing, writing or drawing ink, Knives with cutting blades, paper knives, pencil sharpeners and blades therefor, spoons, forks, ladles, skimmers, cake-servers etc, LED lamps, lights and fixture, their metal printed circuits board, Tetra Pack, Power driven pumps, Works contract for roads, bridges, railways, metro, effluent treatment plant, crematorium etc., Machines for cleaning, sorting or grading seed, grain, pulses, eggs, fruit or other agricultural produce and its parts, milking machines and dairy machinery are set to become costlier as the GST rate has been increased on these goods and services from 12% to 18%.

Cut and polished diamonds will also become costlier as the GST rate on it will rise from 0.25% to 1.5%. 

Ostomy appliances, Orthopaedic appliances — splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability and intraocular lens will  become cheaper as the GST rate will fall from 12% to 5%. 

Transport of goods and passengers by ropeways (with input tax credit) will also become cheaper as the GST rates on these services will now be 5% from 18%.

Cheques, loose or in book form, Maps and hydro graphic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed and Hotel accommodation priced up to Rs 1000/day will also become costlier and GST exemption has been withdrawn on all these items. 

The reforms also suggested some extra measures for physical verification such as geotagging, biometric authentication, use of electricity data and real time monitoring at the time of registration for high risk taxpayers.

The council also suggested mandatory generation of E-way bills by states for intra-state transportation of gold and precious stones with a minimum threshold of 2 lakh. 

The changes announced by the GST council were a part of the response to the impact of pandemic and revenue losses due to the implementation of GST in some states. According to the officials, these compliance, measures and rate changes are expected to yield 15,000 crore revenue in a year.