While the GST rate on sanitary pads was cut from 12% to zero, rakhis were exempted from the tax as well, Finance Minister Piyush Goyal told reporters here. This would mean there would be no input tax credit available, even though inputs in the production of sanitary napkins are taxed.
Other items for which the GST rate was cut include footwear, water heaters, electric irons, refrigerators, lithium ion batteries (used in electric vehicles), hair dryers, vacuum cleaners, food appliances and ethanol.
The value limit of footwear was enhanced from Rs 500 to Rs 1,000 for 5 per cent rate.?
While the taxes will have to be paid every month, traders with an annual turnover up to Rs 5 crore will have to file tax returns every three months, said Goyal.
"There seems to be no intention of introducing cess and digi-linked incentives (if any) on the tax rates, so as to encourage ease of reporting among taxpayers and to continue with a simple GST rate structure", Gupta added.
India slashed the sales tax rate on over 50 products on Saturday in a move aimed at appealing to traders and the middle classes as Prime Minister Narendra Modi's government eyes next year's elections. Since its launch last July, the GST Council has reduced rates on over 320 items and with Saturday's reduction, the number will swell by nearly a third. He said, GST on imported urea and ethanol sold to oil companies for blending with petrol and diesel has been reduced to 5 per cent.
GST on handmade carpets and handmade textile floor coverings has been reduced from 12 percent to 5 percent.
A special meeting of the GST Council will be held on August 4 in Delhi and it will focus on the Micro, Small and Medium Enterprises sector.
Mr Goyal said, simplification in tax is a government priority. The council also simplified the return filing process for small businesses. "It has also been decided that the GST Council will rise above revenue consideration and focus more on job creation and economic growth", Goyal said.
The issue of sugar cess was also reportedly taken up by the GST Council during its meeting today, but a definitive decision has not been reached yet.
The Council also approved amendments to GST-related laws, and deferred the reverse charge mechanism to September 30, 2019.