The 47th Goods and Services Tax (GST) Council meeting was held on 29 June 2022 in Chandigarh. The Union Finance Minister Nirmala Sitharaman addressed the media after the deliberations of the Council to brief the changes in GST rules and the revised rates for the goods and services.

The GST Council approved many changes to the tax rate for several goods and services bringing more items into the tax net and increasing the tax revenue.

The Government has made a decision to increase rates on household items including kitchenware from 12% to 18%. The call on hiking rates on casinos, horse racing, and online gaming was deferred as few states required more consultation. No decision has been taken on extending the period of GST compensation cess even though many states have demanded for the same.

Key Takeaways from the GST Council Meeting

Let us take a look at all the changes announced in the GST system and the revised GST rates for goods and services.

Goods and Services to get costlier

• The Finance Minister announced the outcome of the 2-day Council Meeting and hiked rates for numerous goods and services in India.
• The Council approved a recommendation to levy a 12% tax on hotel rooms charging below ₹1,000 per day. 
• Until now, only hotels above the threshold were charged 12% GST.
• The GST Council also decided to charge a 5% GST without input tax credit (ITC) on hospital rooms with rent above ₹5,000, excluding intensive care units (ICU)
• An increase in tax was also proposed on electronic waste from the earlier 5% to 18% and also for petroleum and coal bed methane to 5% from 12%.
• The rates for packaged food items such as packaged cereals, wheat, maize, and rice which are not branded but sold in a labeled package may increase by 5%.
• Edible oils and milk products may become more expensive as a result of GST rate hikes.

Correcting Inverted Duty Structure

The GST council has also considered the recommendation by the group of ministers (GoM) on correcting the inverted duty structure. The Goods and Services Tax Council, which includes high-level Central and State finance ministers, made a decision to rationalize tax rates on some goods and services to remove an inverted duty structure.

Now, several goods and services will attract higher GST. A GST of 18% will be imposed on goods such as LED lamps, ink, knives, blades, power-driven pumps, and dairy machinery, which is higher than the current rate of 12%. Moreover, the tax rate on solar water heaters and finished leather has also increased from 5% to 12%.

The GST Rate for services including work contracts for roads, irrigation projects, hospitals and educational institutions would now be levied at an increased rate according to the Finance Ministry.

New GST Rates

Check out the changes in GST rates in the given table –

Services provided by RBI, SEBI, IRDAI, FSSAI have come under the ambit of GST tax net. The revised GST rates are slated to be applicable from 18 July 2022. The GST Council will meet again in the first week of August to discuss the rates on online gaming, casino, and horse races. The decision on continuing the compensation cess will also be taken in August as many states want the cess to continue.  The GST council has also extended the ₹40 lakh threshold exemption for intra-state sales and the ₹1.5 crore threshold under the composition scheme to online sellers, thus providing a big relief to MSMEs.

Follow Legaltree for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.