Auto, realty firms may not get relief at GST meet today

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The Goods and Services Tax (GST) Council is unlikely to reduce tax on cement and automobile parts from the peak rate of 28 percent in its meeting on Friday despite intense lobbying by the industry. Facing a severe slowdown, the two sectors construction and automobile have been seeking a demand boost from the government. But a tax reduction on cement and auto parts would have meantarevenue hit of Rs 35,000 crore to the government, suggest estimates. Issues related to the tax structure for solar projects, reduction in the tax rate on electric vehicles, e-ticketing for movie theatres, and a unified rate on the lottery are expected to be discussed during Union Finance Minister Nirmala Sitharaman´s first Council meeting. “There is no scope for reduction in the GST rate on auto components and cement at this stage as they are big revenue contributors. Reduction in rates on items in the peak tax rate is not on the agenda,” said a government official.

He added with EVs yet to take off, there was no significant revenue impact per se. The Council will take up rate cut for EVs from 12 to 5 percent. About 34 items falling in the sin and luxury goods are taxed at 28 percent. With a grim revenue position, the government is unlikely to shrink the peak tax slab. Shortfall in the central GST (CGST) for 201819 stood at Rs50,000 crore, and the government will need growth of 33 percent to meet the steep target of Rs6.1 trillion for FY19. About 60 percent of the revenue comes from items in the 18 percent rate slab, 13 percent from items in the 12 percent slab, 22 percent from items under 28 percent, and the rest of the revenue from 5, 3 and 1 percent slabs.

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