ACs, Refrigerators, Video Games To Be Cheaper As Centre Preps To Cut GST

Air-conditioners (ACs), refrigerators, washing machines, digital cameras and video games are set to become cheaper with the government preparing to lower the Goods and Services Tax (GST) on most consumer goods, sources told NDTV on Wednesday. While the GST on ACs, digital cameras and video games is at the highest slab of 28 per cent, refrigerators and washing machines are taxed at the rate of 18 per cent. To simplify the indirect tax regime, the government plans to move most goods to a GST of 18 per cent and below.

The decision could be cleared by the GST Council as early as Saturday.

The items likely to get cheaper include water heaters, paints, perfumes, tractors, and auto parts and accessories, the sources said.

Prime Minister Narendra Modi had said at an event on Tuesday that the government was "approaching a stage where 99 per cent items can be brought under 18 per cent." He also said the government was looking to reduce the number of items in the highest bracket to just luxury goods.

"...We firmly believe that GST must be as simple as possible and we are also working constantly in that direction," PM Modi said at the event in Mumbai.

GST, the government's biggest tax reform, sets rates from 28 per cent to 5 per cent on most items, replacing an array of central and state duties.

"We welcome the statement by the PM yesterday for lowering down the tax rate... The initial mandate of the GST was to keep 10-15 items under 28 per cent slab, but it was 200 and now it is 35 items. So there is an urgent need of bringing down tax rates of around 20 items which are used either by the industry as a raw material or as daily consumables... this structure should be harmonized," said Praveen Khandelwal, Chairman, Confederation of All India Traders.

Other items likely to be cheaper include vacuum cleaners, shavers and hair clippers, besides cement, putty, varnish and marbles, the sources added. But 28 per cent GST is likely to continue for luxury automobiles, yachts, private aircraft, cigarettes, pan masala, tobacco products, betting or bidding and soft drinks.

Appliances such as vacuum cleaners, shavers, hair clippers and projectors currently attract a rate of 18 per cent under GST. Building materials like cement, putty, paints and varnishes are taxed at 18 per cent, while marbles attract a tax rate of 28 per cent.

"97 per cent of all items has 18 per cent or lower tax. If the PM takes this to 99 per cent of all items, only excluding non-merit goods, will be positive news. As the GST net widens, all these items will gravitate towards the 15 per cent mark. This will give huge impetus to consumption and demand," said Rajiv Kumar, Vice-Chairman of NITI Aayog.

Faulty implementation of GST along with demonetisation are seen by many as the two big economic steps that played a role in the government's recent election setbacks in three big BJP-ruled states. Many within the party hope for speedy reforms, especially with the national election just months away.