GST rates may be lowered for some goods, services

High levies may hit some sectors: experts

The government may bend and lower the rates on certain goods and services under the proposed GST regime.

There was widespread view that high levies as decided by the Goods and Services Tax (GST) Council may cripple some sectors.

The GST rates on motor vehicles, especially hybrid vehicles, insurance sector and, tourism and hospitality may see a revision in the coming days before the rules are finalised for its rollout on July 1, sources told DH.

Vociferous demand has been made for a relook into the rates of hybrid vehicles which have been put under the highest tax plus cess bracket (28%+15%).

The entire automobile industry has spoken in one voice against this with India’s largest carmaker Maruti Suzuki India’s chairman R C Bhargava calling the move “an inadvertent error” and “against government’s stated policy”.

Maruti sells its Ciaz and Ertiga fitted with mild hybrid engine. Hybrid vehicles run on a mix of electric power and conventional fuel which emit less pollutants than cars that run purely on petrol and diesel.

The move may also be opposed by the government’s think tank Niti Aayog which is working on a plan to promote electric vehicles. The government had recently roped in Niti Aayog to work on such a plan after it decided to switch most of its vehicles to battery power by 2030. However, the government had last month withdrawn a subsidy meant for mild hybrid vehicles which was aimed at promoting production of hybrid and electric vehicles.

Sources said there may be a re-think on taxes on hybrid vehicles at par with the electric ones under the GST regime. Tax on electric vehicles has been kept at 12% under GST.

Similarly, a 28% tax on five star hotels and room rentals above Rs 5,000 per night has been opposed by the hotel industry. The government’s policies, including a ban on sale of liquor within 500 metres of highways, have had an adverse impact on the tourism sector, said sources . The industry feels India’s taxes are far more than countries like Singapore, Thailand and Myanmar.