28% GST on 178 items cut to 18%

Guwahati, November 10

In the biggest GST rejig so far, tax rates on over 200 items, ranging from chewing gum to chocolates, to beauty products, wigs and wrist watches, were today cut from November 15 to provide relief to consumers and businesses amid an economic slowdown.

Edit: One nation, one tax

As many as 178 items of daily use were shifted from the top tax bracket of 28 per cent to 18 per cent, while a uniform 5 per cent tax was prescribed for all restaurants, both air-conditioned and non-AC, Finance Minister Arun Jaitley said after the GST Council meeting.

(Follow The Tribune on Facebook; and Twitter @thetribunechd)

Currently, 12 per cent GST on food bill is levied in non-AC restaurants and 18 per cent in air-conditioned ones.

All these got input tax credit, a facility to set off tax paid on inputs with final tax.

Jaitley said the restaurants, however, did not pass on the input tax credit (ITC) to customers and so the ITC facility is being withdrawn and a uniform 5 per cent tax is levied on all restaurants.

Restaurants in starred-hotels that charge Rs 7,500 or more per day room tariff will be levied 18 per cent GST, but the ITC is allowed for them. The restaurants in hotels charging less than Rs 7,500 room tariff will charge 5 per cent GST, but will not get ITC.

The all-powerful GST Council pruned the list of items in the top 28 per cent goods and services tax (GST) slab to just 50 from the current 228. So, only luxury and sin goods are now in the highest tax bracket and items of daily use have been shifted to 18 per cent bracket.

Also, tax on wet grinders and armoured vehicles was cut from 28 per cent to 12, he said, adding that the tax rate on six items was reduced from 18 to 5 per cent, on eight items from 12 per cent to 5 per cent and on six items from 5 per cent to nil.

The top tax rate is now restricted to luxury and demerit goods like pan masala, aerated water and beverages, cigars and cigarettes, tobacco products, cement, paints, perfumes, ACs, dish washing machine, washing machine, refrigerators, vacuum cleaners, cars and two-wheelers, aircraft and yacht.

Launched on July 1, the GST weaved 29 states into a single market with one tax rate, but while traders and small businesses complained of increased compliance burden, voices of dissent rose on the high tax rate on some common use goods.

With the economy growing by its slowest pace since the Narendra Modi government came to power, the “panic-stricken government has no option but to concede demands for change” in the tax, former Finance Minister P Chidambaram said. — PTI

With inputs by Bijay Sankar Bora

SOME ITEMS THAT ARE SET TO GET CHEAPER 

• Chewing gum
• Chocolates
• Coffee
• Custard powder
• Marble and granite
• Dental hygiene products
• Polishes and creams
• Sanitaryware
• Leather clothing
• Artificial fur
• Cookers
• Stoves
• After-shave
• Deodorant 
• Detergent and washing powder
• Razors and blades
• Cutlery
• Storage water heater
• Batteries
• Goggles
• Wrist watches
• Mattress