37th GST Council Meeting, 20th Sep 2019 at Goa

37th GST Council Meeting, 20th Sep 2019 at Goa

The GST Council on Friday announced rate cuts for the hospitality industry, but didn’t announce any major relief for auto and cement sectors. GST Council, however, recommended lower 12 per cent cess on 1,500cc diesel and 1,200cc petrol vehicles with capacity to carry up to 13 people. Analysts were of the opinion that after Finance Minister Nirmala Sitharaman slashed corporate tax early on Friday, hopes of further GST cuts for auto and cement sectors had came down.

The GST Council in its meeting on Friday, approved the proposal to cut rates on hotel tariffs. The tax on room tariff of up to Rs 7,500 has been slashed to 12 per cent from the existing 28 per cent. There will be no GST on room tariffs of below Rs 1,000 per night.

This will come as a boost to the sector, which has been reeling under the pressure of an economic slowdown. The move is expected to serve a dual purpose of boosting tourism and generate more employment. Earlier in this week, hotels stocks had rallied on hopes of the rate cut.

On the other hand, GST rate on caffeinated products has been increased to 28 per cent from 18 per cent, plus there will be an additional cess of 12 per cent. GST on railway wagons was also raised from 5 per cent to 12 per cent. The GST council didn’t announce any major relief for the auto sector, which was widely expected.

Over the last one month, auto stocks including Maruti Suzuki, Bajaj Auto, Hero Motocorp, Mahindra & Mahindra, Tata MotorsNSE 7.29 %, Atul Auto, Ashok LeylandNSE 18.49 %, Eicher MotorsNSE 13.38 %, TVS Motor, Hindustan MotorsNSE 0.00 % had railed 6-25 per cent on hopes of a cut in GST rates and after the FM slashed corporate tax rates.

Similarly, shares of cement companies such as The Ramco Cement, J K Cements, UltraTech Cements, ACC, Keerthi Industries, NCL Industries, Orient Cement, Kakatiya Cement, India CementsNSE 5.57%, Shiva Cement and Andhra Cements rose 5-73 per cent. Earlier in the day, the government slashed corporate tax for domestic and new local manufacturing companies. The effective rate will be 25.17 per cent, including surcharges and cess. The measures will be implemented through an ordinance.

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