Big Day For India Inc! GST Council Announces Tax Sops For Hotel, Defence, Jewellery Sectors

After announcing a slew of relieves for micro and small medium enterprises (MSMEs) earlier in the day, Finance Minister Nirmala Sitharaman during a goods and services tax (GST) meeting announced reduction on a number of goods and services.

GST Council Meet: Sitharaman Announces Rate Cuts For Hotels, Defence, Jewellery Sectors
Finance Minister Nirmala Sitharaman during the 37th meeting of the GST Council, in Panaji. (Image: PTI)
By: ABP News Bureau
Updated: 20 Sep 2019 10:19 PM
Panaji: After announcing a slew of relieves for micro and small medium enterprises (MSMEs) earlier in the day, Finance Minister Nirmala Sitharaman during a goods and services tax (GST) meeting announced reduction on a number of goods and services to spur demand. The key sectors which would benefit from GST rate cuts are hotels, gems & jewellery, defence and automobiles.
Announcing the rate cuts following the GST Council meeting here, Finance Minister Nirmala Sitharaman said that hotels room with tariff of Rs 7,500 crore would now attract 18 per cent GST from 28 per cent earlier. The hotel rooms costing between Rs 1,000 and Rs 7,500 would attract 12 per cent GST. No tax would be levied on hotel rooms with rental up to Rs 1,000.

The GST on caffeinated beverages has been hiked to 28 per cent plus additional cess of 12 per cent as against the current rate of 18 per cent, FM Sitharaman said while briefing the media after the GST Council meeting. Among other rate changes, the Council has reduced rates for cups and plates made from leaves and hides to nil. The Council has exempted specified defence items from GST to promote this key sector.


Among other major items, the Council has reduced compensation cess on passenger vehicles with seating capacity of 10-13 persons by 1-3 per cent, thus making them cheaper. Railway wagons, coaches and rolling stocks would, however, now attract higher GST of 12 per cent from 5 per cent earlier. The revised GST rates would become effective from October 1, 2019.

In a major boost to gems and jewellery sector, the Council recommended to reduce GST on cut and polished semi-precious items to 0.25 per cent from 3 per cent now. The two back-to-back announcements are set to boost growth and investment.

With most engines of growth stuttering and GDP declining to six-year low of 5 per cent in the April-June quarter, pressure has been mounting on the government to revive the economy. Some external factors like US-China trade war has added to the woes. In the wake of domestic and external headwinds, the Reserve Bank of India recently lowered its GDP forecast and pegged it at 6.9 per cent in 2019-20. Several rating agencies and research firms expect the growth to be in the range of 6.5-7 per cent.

The poor show in the first quarter of the current fiscal has prompted the Modi government to take measures to boost growth and lift business sentiment. Starting August 23, Finance Minister Sitharaman has announced four set of measures to put economy on fast track.

(With inputs from IANS)

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