Expectation Inputs on 55th GST Council Meeting by Karthik Mani, Partner, Indirect Tax, BDO India
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Below the Expectation Inputs on 55th GST Council Meeting by Karthik Mani, Partner, Indirect Tax, BDO India
1. The proposal to levy tax on some of the luxury items, such as watches or shoes costing above the specified value would help increase tax collection. However, it is hoped that similar to the practice followed for hotels, such tax rates would be linked to actual sale price and not MRP, to avoid complications in the cases, where the products are sold at a price lower than the MRP.
2. The reduction in GST rates of health insurance would lead to a reduction in costs for the common man, helping to promote the coverage of health insurance. However, if health insurance is exempted from GST for all or specified persons, the insurance companies would lose out on input tax credits to that extent and accordingly, the reduction in costs can be less than the amount of GST previously charged.
3. While the proposal to levy GST on readymade garments in multiple slabs based on price would reduce the accumulation of ITC for the industry and improve working capital, it would increase the cost of garments for the end consumer.
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