New Delhi, September 19: All eyes will be on the Goods and Services Tax (GST) Council meeting that will take place on Friday. Reportedly, the Council will announce a cut in tax rates at its Friday meeting on products and services that typically are not major revenue generators for the central and state governments. Economic Crisis Hits Automobile Sector: Tata Motors & Honda Lose Sales By Over 50% in August 2019; Here Are All The Details.
The Council will be meeting in the middle of the economic slowdown which has hit revenue of both central and state governments. Every sector is reeling under huge losses, which has affected their sales owing to low demand. As a result of the slowdown, numerous job slashes have occurred. Biscuit Manufacturers Write to FM Nirmala Sitharaman Seeking Reduction in GST on Packs Below Rs 100 per Kg.
No Relief Likely for Auto, Biscuits and Telecom Industry:
On Wednesday, the GST officials rejected demands for a cut in tax rate on items ranging from biscuits to car because of the tight revenue position as any reduction will dent the Centre and the state's collections, according to a PTI report. The automobile industry which is one of the worst affected in the economic slowdown has long been demanding reduction in GST rate from the present 28 percent to 18 percent.
However, the Committee is of the view that a rate cut would affect the collection as auto sales contribute to almost Rs 50,000-60,000 crore to the total GST kitty. The GST Council also rejected the telecom ministry's proposal to reduce GST rate for telecom services from the present 18 percent to 12 percent, according to sources quoted in the report.
Hotel Sector And Outdoor Catering Services Can Expect Some Relief:
The sectors that can expect some respite are- hotel industry and outdoor catering service. The hotel industry has recommended raising tariff ceiling to up to Rs 12,000 per night under 18 percent GST slab. At present, 18 percent GST rate is applicable for hotel tariff up to Rs 7,500 per night.
The auto sector is suffering from high GST rate and lack of adequate liquidity had recorded a slump of 18.71 per cent in July, the highest monthly sales de-growth in the last 19 years. Society of Indian Automobile Manufacturers (SIAM) data showed that total sales of the Indian automobile sector declined by 23.55 per cent during July to 1,821,490 units, from 2,382,436 units sold during the corresponding month of the previous year.
The industry body Biscuit Manufacturers Welfare Association (BMWA) in the country recently wrote to Finance Minister Nirmala Sitharaman highlighting that the affordable biscuit consumption has been steadily declining over the last few months. The industry body demanded for a reduction in GST from the 18 percent to 5 percent on biscuits with sale value up to Rs 100 per kg.
It will be interesting to see what announcements are made on Friday by the GST Council and if they can provide some relief to the ailing sector reeling under huge losses.