Guwahati, November 10, 2017

The GST Council on Friday decided+ to reduce tax rate on a wide range of mass use items — from chewing gums to detergents — to 18 per cent from current 28 per cent, Bihar deputy chief minister Sushil Kumar Modi said.

The all-powerful council pruned the list of items attracting the top 28 per cent tax rate to just 50 from 227 previously, Modi told reporters here. In effect, the council, in its 23rd meet+ today, cut rates on 178 goods.

Facing intense heat from opposition-ruled states over keeping mass used goods in the 28 per cent bracket which was meant for luxury and de-merit goods, the Council pruned the list to 50 as against 62 that was recommended by its fitment committee.

The Goods and Services Tax (GST), implemented from July 1, has five tax slabs of 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent.

"There were 227 items in the 28 per cent slab. The fitment committee had recommended that it should be pruned to 62 items. But the GST Council has further pruned 12 more items," Modi said.

He said all types of chewing gum, chocolates, preparation for facial make-up, shaving and after-shave items, shampoo deodorants, washing powder detergent and granite and marble will attract lower 18 per cent tax rate.

Meanwhile, finance minister Arun Jaitley said that a uniform 5% rate will be levied on all AC and non-AC restaurants, and added that the eateries will not get input tax credit.

"Restaurants in starred-hotels that charge Rs 7,500 or more per day room tariff will be levied 18 per cent GST but input tax credit is allowed for them. Those restaurants in hotels charging less than Rs 7,500 room tariff will charge 5 per cent GST but will not get tax credit," Jaitley said.

"There was unanimity that in 28 per cent category there should be only sin and demerit goods.

So, today the GST Council took a historic decision, that in the 28 per cent slab there will be only 50 items and the remaining items have been brought down to 18 per cent," he said.

The council is also expected to roll out a number of changes in rules to ease the process of filing taxes and smoothen compliance issues.

Paints and cement have been retained in the 28 per cent tax bracket, he said. "Luxury goods like washing machines and air conditioners have been retained at 28 per cent," he added.

The decision taken by the GST Council will have a revenue implication of Rs 20,000 crore annually.

"There is consensus that slowly 28 per cent slab should be brought to 18 per cent. But it will take some time because it has a big revenue implication," he said.

Modi said that it was important the system under GST regime stabilizes as only four months were remaining for the close of the current financial year.

[The Times of India]