The GST regime has four primary tax rate slabs 5%, 12% and 18% and high rate of 28%. The building material items are largely kept under the highest slab that has affected small and medium enterprise business in the building material space. The demand to lower the GST slab from steep 28% to 12% or 18% is now being seriously considered by the GST council says those people who are associated with the trade associations.
With an objective to offer big relief to small and medium enterprises (SME), the panel is likely to rationalize tax rate in sectors where the total incidence of taxation has gone up because the goods were earlier either exempted from excise or had attracted lower VAT rates in the previous indirect tax regime. The small-scale furniture makers, ply and door assemblers, small shopkeepers and retailers would be gaining with this change.
All types of furniture attracted 28 percent tax under GST. Wooden furniture is handmade product by unorganized sector artisans and is mostly used by middle-class families. There have been demands for lowering tax incidence to offer ease to them. Also, some items of plastic attracted 18 percent GST but goods like shower baths, sinks, wash basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware of plastics attract 28 percent levy which is expected to be brought under lower slab.
The GST Council, at its next meeting on November 10, is likely to cut rates on Plywood category, hardware fittings, handmade furniture, plastic products and daily use items, according to reports. The government consideration to offer relief to SMEs is highly anticipated at the GST Council chaired by Finance Minister Arun Jaitley during the GST committee meeting scheduled to happen in Guwahati, Assam. There hopes have become very promising with the statement made by Prime Minister Narendra Modi who has hinted that more measures would be taken for businesses to ease under the GST regime.
There were high expectation that GST Council Meeting on Oct 6, will announce relief for plantation based products like plywood but it did not get any mention when council lowered tax rates on 27 products and a few services, while offering relief to exporters and small and medium enterprises (SMEs).