Tag: Gst reform

Breaking: No relief in GST, big blow to Indian media industry

The GST Rate rationalisation exercise saw rate cuts for over 400 products and services, but the GST rate for broadcasters remained the same at 18%. Ahead of the latest GST Council meeting, broadcasters had made a pitch for lowering the GST rate from 18% to 5%.

Interestingly, the GST Council has slashed the GST rate for TVs from 28% to 18%, to stimulate greater consumption. But the Council has not seen it fit to allow a rate cut for broadcasters.

Currently the services like DTH, IPTV and subscriptions to digital media services are facing an 18% GST burden. The pitch by the industry had sought to reduce it to 5% or exempt it entirely.

News broadcasters are quick to point out that printed newspapers are spared the GST burden and are exempt. Broadcasters also claimed financial pressures and reduced operating margins, putting to risk millions of jobs. They argue that a reduction in the GST rate will bolster the health of the sector at large.

The All India Digital Cable Federation (AIDCF) had written to the Finance Ministry and the Ministry of I&B, seeking GST relief. In their submission, they had cited how Cable TV had a reach of over 6.4 crores and how it supported over 10-12 lakh direct jobs.

AIDCF’s pitch was that putting it in the 5% slab would make Cable TV – the primary source of information, entertainment and education for crores – more affordable and accessible. The AIDCF letter had argued that MSOs and LCOs were made up of mostly MSMEs, and any GST relief would allow them to build wired broadband capacity – a stated objective of the Government.

In the letter, AIDCF Secretary General had said, “Cable TV is not just entertainment, it is part of India’s social fabric. Families in small towns and rural areas gather around it as a shared medium of education, information, and culture. A rationalisation of GST to 5% will not only ease the burden on consumers but also preserve lakhs of livelihoods and safeguard an industry that has been instrumental in bridging the digital divide.”

Tobacco bill to be introduced in Parliament’s winter session, cess suspended

The central government is expected to introduce legislation in Parliament’s upcoming winter session aimed at imposing a tax on tobacco and related products. This proposed tax may replace the existing GST compensation cess currently applied to these items.

The existing compensation cess, which operates alongside the 28% GST, is anticipated to remain in effect for at least three months. This allowance will enable the government to fulfill its loan repayment obligations to states for the losses they incurred during their transition to the GST system implemented eight years ago. Traditionally, Parliament’s winter session begins in late November or early December.

In a recent GST Council meeting, Union Finance Minister Nirmala Sitharaman announced that the current GST rates and compensation cess would persist on products such as pan masala, gutkha, cigarettes, and other tobacco goods, including zarda, unmanufactured tobacco, and bidi, until the loans are settled in full. Following this, these items will be subjected to a higher GST rate of 40%, negating the existing compensation cess.

An official source quoted by the Economic Times indicated that there may be an alternative levy introduced to replace the compensation cess while still keeping tax levels consistent on tobacco products. On tobacco, the GST part is settled at 40%, and we expect the compensation cess period to be over by this calendar year. So, there is time to weigh some options on the table. But a decision will be made in due course,” the source stated.

Currently, these products face a total indirect tax rate of 53%, which consists of a 28% GST rate, compensation cess, central excise duty, and national calamity contingent duty. The original deadline of October 31 for terminating the compensation cess was based on projected monthly collections of around Rs 10,000 crore.

However, with luxury cars, coal, and aerated drinks no longer subject to compensation cess as of September 22—when revised GST rates take effect—the monthly cess collections are expected to decline, ultimately prolonging the loan repayment period for the states.

Now watching fours and sixes is heavy on the pocket, 40% GST imposed on IPL tickets

New reforms of GST Council: Increase in tax on IPL tickets

Following the new tax reforms, the GST Council has put Indian Premier League (IPL) tickets in the topmost tax bracket, increasing the duty from 28% to 40%. These are now classified along with luxury items and sin goods like casinos.

This change is part of the new GST 2.0 framework, which reflects the government’s intention to treat high-end sports entertainment as discretionary spending. As a result, even modest tickets will cost a lot.

As per the new pricing:

The ₹2500 ticket which used to cost ₹640 with taxes earlier, will now cost ₹700, an increase of ₹60.

A ₹1,000 ticket has now increased from ₹1,280 to ₹1,400.

The high-end ₹2,000 ticket has increased from ₹2,560 to ₹2,800.

In contrast, those buying movie tickets costing less than ₹100 will now have to pay just 5% GST, down from 12%. This shows that the government is selectively promoting less expensive cultural events and cutting down on premium sporting events.

With 18% GST applicable on domestic cricket and international matches, grassroots sports will remain accessible. But when it comes to the IPL, fans may now think twice before making bookings.

E-commerce sellers are troubled by GST changes, billing problems increased during festive season

Challenges for E-commerce Sellers Amid GST Changes Ahead of Festive Season

As the festive season approaches, a critical period that accounts for a significant portion of annual sales for Amazon and Flipkart sellers, a cloud of uncertainty looms regarding compliance issues stemming from the recent changes to GST slabs. Sellers are expressing concerns over the potential complications these tax adjustments may introduce.

One major worry among sellers is the possibility that updated tax rates may not be reflected in the systems of e-commerce platforms promptly. Given the high volume of transactions during the festive period, discrepancies in platform invoicing could arise, impacting GST filings. Sachin Manilal Gala, a registered seller on major platforms, emphasized, “All listings on marketplaces, apps, and websites must reflect the new rates promptly. Billing, accounting, and inventory software needs to be updated by platforms and sellers because any delay or error can lead to wrong tax filings and penalties.”

The complexity deepens as every product sold on e-commerce platforms is linked to a specific tax code. Another seller, Chirag Haria, highlighted the challenges sellers face in updating these tax codes. He raised the topic of clarity on timing: “If the 12% tax slab is removed and products are shifted to either 5% or 18%, when should the seller update the tax code? What about sales occurring at 12 am on that day? Sellers have faced similar issues during previous tax rate changes.”

Additionally, the concern around product returns exacerbates the situation. With most platforms allowing returns within a seven-day window, consumers might choose to return items to benefit from the lower GST rates. “There could be an issue with accounting for returns. A product sold at 12% GST might get returned when the rate has decreased to 5%,” a seller noted.

Despite reaching out for clarification, queries sent to Amazon, Flipkart, Myntra, and Meesho did not receive immediate responses. As the first phase of major online sales is set to commence just before Navaratri, sellers worry that any GST cuts implemented closer to Diwali could severely impact their festive sales.

Festive Retail Sales Hit as Buyers Await GST and Price Cuts

Festive Retail Sales Hit as Buyers Await GST and Price Cuts

By Pankaj Doval, Times of India

New Delhi: The news of a reduction in goods and services tax (GST), while cheering consumers and companies, has led to a peculiar problem for retailers, both offline and online. Companies report that festive demand, which typically begins from the Ganesh festival in Maharashtra and Onam in the south, is turning out to be a muted affair as buyers wait for the GST rates to actually come down, which will ultimately result in lower retail prices.

We are worried as the festive opening is normally a bumper period, running up to Dussehra and Diwali. But the news of a GST rate cut and the impending reduction in retail prices is keeping buyers out of the market until a decision finally happens on the ground,” said executives from car and consumer goods companies.

The situation is similarly dire for white goods retailers, such as those selling TVs, air conditioners, and dishwashers. “We are already fielding numerous queries from buyers about price cuts and when they will actually happen. Buyers have indicated they will wait for price reductions before finalizing their purchases,” said the CEO of a leading consumer goods company.

Many consumers have decided to wait rather than make purchases, with reports of some even canceling car bookings.

Impact on Sales

Brands like LG, Samsung, and Sony are experiencing a slowdown in TV sales, while dealers are faced with high inventory due to the anticipated festive rush. If stock is not liquidated within the next 60 days, banks will charge higher interest rates on inventory finance and impose penalties, according to the Federation of Automotive Dealers Association.

Upcoming GST Council Meeting

The GST Council is scheduled to meet on September 3 and 4 to discuss rate rationalization, including a switch to a two-slab structure alongside one more for luxury and sin goods. This two-day meeting will be preceded by a meeting of officers on September 2, as indicated by an office memorandum from the GST Council Secretariat.

The ongoing exercise to rationalize GST rates is likely to see the government reduce taxes on certain categories of consumer goods and automobiles. Small cars and two-wheelers are expected to see GST rates fall from 28% to 18%. Additionally, TVs (larger than 32 inches) and dishwashers may also enjoy similar reductions.

Companies find themselves in a dilemma, as price cuts will only be possible following the GST Council’s approval and the announcement of final tax slabs. In the meantime, consumers are holding back on purchases, with many cancelling their car bookings.

Saharsh Damani, CEO of the Federation of Automotive Dealers Association (FADA), stated, “We are already seeing pressure in Kerala and Maharashtra regarding sales conversions. Dealers are carrying high inventory due to the expected festive rush, and if this stock is not sold within 60 days, banks will impose higher interest rates on inventory financing along with penalties. We are seeking assistance from banks, car and two-wheeler companies, and the government. Both the commerce minister and the heavy industries minister have assured us of help.

As the festive season approaches, brands such as LG, Samsung, and Sony continue to grapple with a notable slowdown in their TV sales.

New GST Rates: What Items Will Get Cheaper in India [List]

For India’s middle class, where even a slight change in tax rates can heavily impact household finances, Prime Minister Narendra Modi’s recent announcement brings welcome relief. The government is set to simplify the Goods and Services Tax (GST) structure, trimming the current four-tier system of 5%, 12%, 18%, and 28% into a leaner, two-rate framework of 5% and 18%. A separate “sin tax” category will continue to apply to products like tobacco and luxury goods.

For consumers, this change could mean real savings. Prices of everyday essentials and big-ticket items alike — textiles and apparel, farm machinery, auto components, healthcare, and insurance products, and even staples across the FMCG and retail sectors — are expected to soften. This isn’t just a tweak to tax rates; it’s a reset that could revive demand, lift household sentiment, and inject fresh energy into consumption-led growth.

Finance Minister Nirmala Sitharaman will address the crucial meeting of a group of ministers of states on Wednesday as she makes the case for the sweeping GST reforms. The idea is to put forth the Centre’s viewpoint behind the GST reform proposal. Although the Centre is not a member of the GoM, the presence of the Union Finance Minister and her address will give the GoM a better understanding of the idea and thought process behind the Centre’s proposal,” a source told PTI.

List of Key Items Likely to Get Cheaper Under New GST Regime:

  • Small Cars: From 28% to 18%
  • Insurance Premiums: From 18% to 5% or nil
  • Daily-use Items: (From 5% to nil)
  • Air Conditioners: (From 28% to 18%)
  • Televisions: (From 28% to 18%)

Items Likely to Be Moved to 5% GST Slab, as per ANI:

  • Tooth Powder
  • Bhujia
  • Namkeen
  • Potato Chips
  • Ketchup
  • Jam
  • Mayonnaise
  • Packaged Juices
  • Pasta
  • Noodles
  • Butter
  • Condensed Milk
  • Ghee
  • Cheese
  • Milk-based Beverages

A reduced GST is expected to trigger a multiplier effect by lowering logistics costs and easing compliance. Since many of the affected items are price-sensitive, cheaper prices from lower GST rates are likely to boost demand and generate jobs. Crucially, at a time when Trump’s tariffs are unsettling global trade, this move could enhance the competitiveness of India’s exports.

India’s GST 2.0: Upcoming Reforms and Key Meetings Explained

The stage is being set for what could be the most significant overhaul of India’s Goods and Services Tax (GST) regime since its rollout in 2017. According to government sources, three crucial Groups of Ministers (GoMs) will convene over the next week to deliberate on proposals that are expected to form the backbone of Prime Minister Narendra Modi’s recently announced “Next Generation GST Reforms.”

Key Meetings Scheduled

These meetings come just days after the Prime Minister, in his Independence Day address, called for a simplified two-rate GST structure aimed at reducing compliance burden, improving ease of doing business, and providing relief to consumers. The blueprint under discussion proposes a standard 5% rate for mass consumption items and an 18% merit rate for most other goods and services, reserving a 40% bracket only for select luxury and sin goods.

GoM on Compensation Cess

Scheduled for August 20, this panel is headed by Minister of State for Finance Pankaj Chaudhary. It will deliberate on the roadmap for gradually phasing out the compensation cess, which was originally imposed to compensate states for GST revenue shortfalls. With the five-year compensation window ending, discussions are expected to focus on transition mechanisms and fiscal implications for both the Centre and the states.

GoM on Life & Health Insurance

Also meeting on August 20, this group is chaired by Bihar Deputy Chief Minister Samrat Choudhary. The panel is expected to examine lowering GST on insurance premiums — currently taxed at 18% — to a much lower band, possibly 5% or even Nil for certain categories. A reduction here would directly impact household budgets and could boost the penetration of health and life insurance products.

GoM on Rate Rationalisation

The most critical panel, also headed by Samrat Choudhary, will meet on August 21. This GoM will weigh the Centre’s proposal to move towards a two-tier GST rate structure, a move considered central to “GST 2.0.” The discussions will include recalibrating existing slabs (0%, 5%, 12%, 18%, and 28%) into a simplified framework of just 5% and 18%, while keeping a higher bracket for sin goods.

Why These Meetings Matter

The upcoming deliberations are seen as pivotal in shaping the contours of GST reforms expected to be rolled out around Diwali, billed by policymakers as a “Diwali bonanza.” The Prime Minister has underscored that GST simplification is essential to spur consumption, reduce litigation, and bring India’s indirect tax system closer to international best practices.

Currently, the multiplicity of slabs — including 12% and 28% in addition to the standard 5% and 18% — has led to distortions and classification disputes. By collapsing them into two broad rates, the government aims to eliminate ambiguity, reduce compliance burden for businesses, and lower the cost of essential goods and services for consumers.

Experts note that lowering GST on insurance could be a game-changer, especially in light of India’s low penetration levels. Similarly, rationalising rates on automobiles, clothing, and footwear — categories expected to benefit under the proposed reforms — could provide a direct boost to consumption demand.

The Road Ahead

The recommendations from these GoMs will be submitted to the GST Council, chaired by Finance Minister Nirmala Sitharaman. If approved, the new rate structure could be implemented as early as the festive season, in line with the government’s plan to roll out reforms by Diwali.

Tax expert Abhishek A Rastogi, founder of Rastogi Chambers, notes, “This is not just rate rationalisation; it is a structural reset. By focusing on simplicity, predictability, and fairness, GST 2.0 could help address many pain points businesses and consumers have flagged since 2017.”

For the Centre, these reforms represent an opportunity to strengthen compliance, widen the tax base, and build trust in the GST framework as it enters its ninth year. With the political will now signaled at the highest level, the upcoming GoM meetings will be closely watched as the first decisive step towards India’s GST 2.0.