Construction material, other items to see lower GST rates in coming months: Report

29 Jun 2018

Cement and paint are in the top slab of 28 percent

Moneycontrol News@moneycontrolcom

There is good news for those dealing with construction material as the government is looking at lowering Goods and Services Tax (GST) rates in the coming months, reports The Times of India.

Along with cement and paint, which are in the top slab of 28 percent, the Centre is planning to bring down GST rates on several other items that attract high taxes but do not yield much revenue for the government.

“It’s 80:20 formula, with 80 percent of the revenue coming from a handful of goods and only small amounts collected from bulk of the items. We will look to reduce rates in the coming months, while ensuring that the chain is not broken,” said a source who did not wish to be identified.

Items that could see lower GST rates

According to sources, the government is likely to reduce rates on construction material soon and this will provide a fillip to the sector battling a slowdown, that has also adversely impacted job generation. The issue was a key concern for the Modi government in the run-up to 2019 general elections.

While a plan to reduce the rates on cement was on the table in November when the GST Council met in Guwahati, it was dropped as the rate cuts had already left an over Rs 20,000-crore hole. At that time, the government had slashed taxes on over 200 items, the levy on 176 items reduced from 28 percent to 18 percent, leaving just 50 in the highest slab.

There are several product segments, such as textiles, where the inputs face higher levies than the final product, creating an inverted duty structure and adding to the manufacturers’ woes as the levies are not fully refunded.