Exclusive: GST Council may slash rates on luxury hotels, auto sector unlikely to get relief
As multiple sectors continue to takcle the worst demand slowdown in years, the GST Council is expected to provide relief to some key sectors on September 20.
t a time when the government is chalking out swift plans to tackle economic slowdown, the GST Council on September 20 could take key decisions aimed at curbing growth slowdown.
Details of the meeting's agenda, accessed by India Today TV, indicate that the GST Council will discuss key issues including slowdown, especially in sectors with a high consumer interface.
Not just automobiles but the GST Council will also discuss applicable rates on hotels, biscuits, matchsticks and outdoor catering segments. While the auto sector is unlikely to get any relief, the hotel and tourism sector could get rate relief.
The automobile sector, which has been hit hard by the ongoing demand slowdown, has been asking for a rate cut on vehicles from 28 per cent to 18 per cent. Major vehicle manufacturers feel that a cut could significantly boost prospects of the auto sector ahead of the festive season.
However, several states including Kerala have opposed a rate cut for the auto sector as it could lead to a sharp drop in revenue. The GST fitment committee had also said that a rate cut will "seriously hurt" GST collection as auto sector contributes almost Rs 50,000 to Rs 60,000 crore of total GST collections.
But sources told India Today TV that the decision could be politically coloured and the government could cut rates for a certain period to assist the sector. However, most players from the industry feel that a limited period offer would not deal with the ongoing auto crisis.
They claimed that even if the government announces rate cut till the end of the financial year, prices may again increase with the introduction of BSVI compliant vehicles citing technology upgradation costs.
This is one reason why auto manufacturers are pushing for a long-term assurance from the government besides demanding reduced levy on low-engine capacity two-wheelers.
Moving on, the luxury hotel category, which charges approximately Rs 7,500 per night and invites more than 28 per cent GST could witness some relief on September 20.
A top source told India Today TV that the GST Council will reduce the GST rates applicable to luxury hotels-with rates up to Rs 10,000-Rs 12,000/night-to 18 per cent.
The outdoor catering industry, which is currently charged 18 per cent GST can also expect some relief. The Matchstick manufacturers, too, could expect relief as the industry continues to struggle due to two GST taxes.
As GST collections fell to sub Rs 1 lakh crore last month, the council could consider raising the tax level on "sin goods" like tobacco.
India's biscuit manufacturing unit is also hoping for some relief during the upcoming GST meeting. The industry, which usually generates Rs 35,000 crore annually, claimed that 18 per cent tax on biscuits priced at less than Rs 100/kilo has led to a slowdown.
Biscuit manufacturers said biscuits at Rs 100/kilo and above cannot be taxed at the same rate which applies to those below Rs 100/kilo. However, sources indicate that the industry may not get any relief in the upcoming GST Council meeting.