On Friday, the government decided to offer a number of relief measures that will particularly help exporters, and owners of small and medium enterprises (SMEs) in Gujarat.
The GST council has lowered the tax rates on 27 products and a few services and asked a panel of state ministers to examine if the 18% GST on air-conditioned restaurants could be lowered. Of the 27 broad categories of items that saw a reduction in GST rates, at least eight were in segments where Gujarat is a dominant player, reports Indian Express.
The tax rates for a bunch of products were reduced from 12 percent to 5 percent. These products include sewing thread of manmade filaments and thread of manmade staple fibres and synthetic filament yarn (nylon, polyester). Tariff was also brought down for "cullet or other waste or scrap of glass".
Gujarat has a significant industrial footprint in these segments. As IE notes in this piece, the state accounts for 12 percent of the country's textile exports, it is also the largest manufacturer of manmade fibre.
Meanwhile, the tax rate for food items such as khakhra, "namkeens" and sliced dried mango have been reduced.
It's no surprise that Gujarat goes to polls later this year.
While Prime Minister Narendra Modi has said that the rule changes are in line with the assurance given by the government that if "any sector needs temporary assistance" on account of structural reforms like GST, the government will provide it, many on Twitter doesn't quite believe that's the reason.
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