12 pc GST for matches, 18 pc on mobiles phones

Briefing the media after the 39th GST Council meeting, Finance Minister Nirmala Sitharaman also announced that the GST rate on MRO (Maintenance, Repair and Overhaul) services in respect to aircraft will be reduced from 18 per cent to five per cent with full input tax credit and place of supply for Business to Business MRO services will be changed to the location of the recipient. The new rates wlll come into effect from April 1, 2020.

The ministers and Finance Secretary Ajay Bhushan Pandey, however, sought to clarify that the increase in the GST rate on mobile phones need not automatically result in an increase in the price of the phones to the same amount of hike in duty. The hike was more to address the problem of inversion of duty structure where the input costs are more than the price of the final product, they said.

The meeting decided to deliberate theissue of calibrating the rate on other items for removing inversion in future meetings.

On duty rationalisation at 12 per cent with regard to matches, where the man-made ones were attracting five per cent and machine-made 18 per cent, the Minister said Tamil Nadu had raised the issue in a big way in the past. While the Puducherry problem has been solved, now it has been decided that a uniform rationalised GST rate of 12 per cent will be fixed on all types of matches. This would address classification issues, which were discussed in the last meeting, the Finance Minister said.

Briefing reporters, she said Infosys Chairman Nandan Nilekani made a detailed presentation for the transition into a better GST Network system and the requirement of hardware to enhance capacity for addressing the system related issues that are being faced by taxpayers in the IT system. The GST Council has decided that a completely enhanced capacity which were envisaged and proposed by Nilekani by January 2021, should be completed by July 2020, Sitharaman said.