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New GST Rates: Goods and Services Tax Council changes the GST rates for 40 items

September 12, 2017

Revised GST Rates

Goods and Services Tax (GST) Council has, following its 21st meeting, effected some changes to the present GST (goods and services tax) structure in India. The meeting was held on 9th September 2017 at Hyderabad. Incidentally this happened to be the second review meeting following the rollout of GST. It has upped the cess applicable for items such as motor vehicles. The cess on mid-sized cars has been increased by 2%, and for large cars the rate has been upped by 5%.

Sports utility vehicles (SUVs) have had their cess increased by 7%. Initially the GST law had suggested an overall increase of 10% across the board. The overall tax incidence has been kept below 50%. This means that from now on the aggregate tax incidence on mid-sized cars would go up to 45%, SUVs would go up to 50%, and large cars would go up to 48%. Previously, it had been capped at 43% with 28% GST and 15% cess.

What had the industry said?

The industry had actually asked the authorities to effect a differential hike. It had suggested that the increase be lesser for mid-sized with the argument being that if the prices were increased in this category then it would have a detrimental effect on the middle class, the biggest buyers of such cars. In its last meeting GST Council had given its approval to an amendment in the compensation law that sought to raise the cess from 15% to 25%.

The automobile industry had meanwhile reduced prices in the high end segment after GST rolled out. As such it had opposed a widespread increase of cess. The cess rates for hybrid vehicles, small cars, and 13 seaters remain the same.

GST rates slashed

The council has also slashed GST for more than 40 items and some of them may be mentioned as below:

  • walnuts
  • broom
  • clay idols
  • custard powder
  • idly-dosa batter
  • rubber bands
  • raincoat
  • dhoop batti
  • saree fall
  • corduroy fabric
  • computer monitors
  • table and kitchenware
  • prayer beads

It also needs to be stated in this context that khadi products sold at outlets of Khadi and Village Industries Commission (KVIC) would be exempted altogether from GST. The same benefit has been extended to clay idols as well. The government has provided complete exemption to handicraft traders who sell products to other states and earn less than INR 20 lakh a year. They need not register for the same.

Benefits for items of daily use for common man

It needs to be said that most of the items on which GST has been reduced are ones of daily use and as such they would become cheaper. This would only be good for the common people who use them on a daily basis. While speaking to the media, Union Finance Minister Arun Jaitley stated that the changed nature of Indian economy had enabled the decision makers to reduce some of the rates.

Previously the GST applicable for idly and dosa batter was 18% but now it has come down to 12%. Brushes and brooms have been completely kept out from the fold of this tax. As far as computer monitors are concerned the reduction in levy would only be applicable to monitors with screen sizes of equal to or lesser than 20 inches.

Progress of GST

The council has also extended the date of filing returns since the industry is facing plenty of problems in filing them in time. This has happened because the GST website is not working properly enough. Returns have been pouring in at a steady rate as well. The government has also set up a ministerial group to see how GST is functioning. Positively enough, the revenues are on track and a new framework has also been instituted for branded packaged foods.


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I am from Kolkata. Like any other Bengali I love my fish, eggs and bhaat and sweets but I also feel proud to be a part of the biggest melting pot of the world - India. It is true that I need to go a long way before I finally call it a day but I have come some way and am sure will travel further. Cheers :)

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