Bihar deputy chief minister Sushil Kumar Modi said on Friday that the GST Council had decided to reduce tax rate on a wide range of mass use items – from chewing gums to detergents – to 18% from current 28%.
Speaking to reporters, Modi said that the all-powerful council pruned the list of items attracting the top 28% tax rate to just 50 from 227 previously.
In effect, the council, in its 23rd meet today, cut rates on 178 goods, reported PTI.
Finance Minister Arun Jaitley later told reporters in Guwahati after the GST Council meeting that 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.
Facing intense heat from opposition-ruled states over keeping mass used goods in the 28% 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.
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said the restaurants, however, did not pass on the input tax credit (ITC) to customers and so the ITC facility is being withdrawn and a uniform 5 per cent tax is levied on all restaurants without the distinction of AC or non-AC.
Restaurants in starred-hotels that charge Rs 7,500 or more per day room tariff will be levied 18 per cent GST but ITC 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 ITC.
The Goods and Services Tax (GST), implemented “from July 1, has five tax slabs of 0%, 5%, 12%, 18% and 28%.”
“There were 227 items in the 28% 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% tax rate.
“There was unanimity that in 28% category there should be only sin and demerit goods. So, today the GST Council took a historic decision, that in the 28% slab there will be only 50 items and the remaining items have been brought down to 18%,” Modi said said.
Paints and cement have been retained in the 28% tax bracket, he said.
“Luxury goods like washing machines and air conditioners have been retained at 28%.” The decision taken by the GST Council will have a revenue implication of Rs 20,000 crore annually.
“There is consensus that slowly 28% slab should be brought to 18%. But it will take some time because it has a big revenue implication,” he said.