GST COUNCIL SLASHES TAX ON HOTEL TARIFFS VIJAYALAKSHMI RAJU Legal Article Tue, Sep 24, 2019, at ,11:53 AM The GST Council more than doubled the tax on caffeinated beverages but slashed the same on hotel tariffs and some goods with a view to addressing sectoral concerns in a slowing economy. The 37th meeting of the GST Council, headed by Union Finance Minister Nirmala Sitharaman and having representatives of all states, however, did not make a decision on cutting taxes on automobiles as well as items like biscuits which had seen fall in sales on slowing consumption and demand. In all, the GST Council revised rates on 20 goods and 12 services. Sources said the changes will have “very minor” revenue implication as an increase in taxes would make up for reductions. The rate changes shall be made effective from October 1. MAJOR DECISION BY GST COUNCIL: Sitharaman said caffeinated beverages will be charged with 28 percent tax plus a 12 percent compensation cess in place of the current tax rate of 18 percent. This will bring them at par with the tax rate charged on aerated drinks. Also, aerated drink manufacturers have been excluded from the composition scheme and restrictions placed on refund of compensation cess on tobacco products. To boost job-creating hospitality industry and tourism, the GST (goods and services tax) on hotel rooms with tariffs of up to Rs 1,000 per night will be nil. The same for tariff of between Rs 1,001 and Rs 7,500 per night has been cut to 12 percent from the existing 18 percent. Similarly, the tax on room tariff of above Rs 7,500 has been slashed to 18 percent from the existing 28 percent. Passenger vehicles of engine capacity 1,500cc in case of diesel, 1,200cc in case of petrol and length not exceeding 4,000 mm designed for carrying up to 9 persons attract compensation cess of 1 percent for petrol and 3 percent for diesel vehicle over and above the 28 percent tax rate. Council recommended same compensation cess rate for vehicles having these specifications (length and engine capacity) but designed for carrying more than 10 persons but up to 13 persons, she said adding presently these vehicles attract compensation cess at the rate of 15 percent. The Council cut the GST rates on slide fasteners (zips) to 12 percent from 18 percent, marine fuel to 5 per cent from 18 per cent, wet grinders to 5 per cent from 12 per cent and to nil on dried tamarind and plates and cups made up of leaves/flowers/bark from current 5 per cent. A 5 percent GST would be applicable on specified goods used for oil and gas exploration and production under the licensing policy. Import of specified defense goods not being manufactured indigenously, the supply of goods and services to FIFA for organizing under-17 Women’s Football World Cup in India, and supply of goods and services to Food and Agriculture Organisation (FAO) for specified projects in India has been exempt from GST. The Council exempted fishmeal as well as pulley, wheels and other parts for agricultural machinery from GST for specified periods. The GST Council also took an in-principle decision to link Aadhaar with the registration of taxpayers under GST and also examine the possibility of making 12-digit unique identification number mandatory for claiming refunds.