The Impact Of The GST Rate Cut

In a major relief for consumers, the Goods and Services Tax (GST) Council decided to slash tax rates on several consumer durables like televisions, air conditioners, refrigerators, washing machines, video games, trailers and inverters.

- Baishakhi Dutta

The decision of the GST Council to reduce GST rates on several items from 28 per cent to 18 per cent is being hailed by traders dealing in these items. According to the electronics industry, this tax reduction will not only boost sales, but also help customers as the benefit will be passed on to them in the form of price reductions of these items. The new rate of taxes on these items became applicable from July 27.

Relief for ACE players

The impact on the appliances and consumer electronics (ACE) industry will be the highest with the changes in the GST structure for appliances, making it a bonanza time for middle class buyers ahead of the festive season. While most industry players have welcomed this move, a few remain sceptical.

“The reduction in GST rates is definitely a step in the right direction; however, it is still a half-measure that will have little impact,” says Rakesh Dugar, CMD, Mitashi Edutainment. GST rates have been reduced on washing machines and refrigerators but products like TVs above 68.58cm, which constitute almost 90 per cent of the market, as well as the entire air conditioner market are not included in the revised GST rate list. Duggar feels that while the move to cut the GST on televisions with small screens is welcome and will see TV makers pass on the price benefits quickly in that segment, it would have helped if the GST on larger TV screens was also lowered. It is a positive but small step in the right direction, and the government needs to widen the scope of this move to truly make an impact, he says.