Companies across sectors such as durables, automobiles and real estate have been lobbying hard for a goods and services tax (GST) cut as the Narendra Modi-led National Democratic Alliance prepares for a second term in office. Modi and his council of ministers were sworn in on Thursday in the presence of over 8,000 people at the Rashtrapati Bhawan.
Durable firms said the issue of rationalizing the tax rate of products such as air conditioners and larger television sets, which sit in the 28 percent tax bracket, has been on the government’s table for long. “Since July last year, when most appliance and electronic products were moved from 28 percent to 18 percent, companies have been asking for ACs and larger TVs (above 32 inches) to be shifted too in terms of the GST rate,” said Kamal Nandi, business head and executive vice-president, Godrej Appliances, who is also the president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA). “ACs and TVs are not luxury items, but essential goods. It doesn’t make sense therefore to put them in the highest tax bracket. A tax cut will mean that prices will come down, boosting demand,” he said. A 10 percentage point decline in the GST rate on ACs will see a net reduction of 7-8 percent in terms of prices, sector experts said, which is a relief for consumers at a time when new energy labeling norms have pushed up prices by at least Rs 5,000 per unit.
Making The Cut
- The move comes as the market sees consumption slowdown
- ACs, large TVs and all automobiles are in the 28 percent tax bracket
- Real estate firms want a uniform GST rate across segments
- The issue of rationalizing the tax rate of ACs and larger TV sets has been on the government’s table for long