GST Council slashes tax on 178 items from 28% to 18%

SIN TAX Six items move from 18% to 5%; all restaurants moved to 5% slab

Dozens of items of mass consumption such as detergent, shampoo, chocolates and beauty products will become cheaper, as the panel on Goods and Services Tax (GST) decided on Friday that only so-called sin goods should be taxed the most under the new multi-rate taxation system.

The GST Council recommended that the government prune by nearly three-quarters the number of items under the highest 28% slab, which should help ease pressure on the government due to economic disruptions from the GST rollout and last year’s demonetisation.

The restaurant industry will not get input tax credit, even as tax rate stands reduced to a uniform 5% for all AC or non-AC restaurants, finance minister Arun Jaitley said.

Making things cheaper will set government revenues back by ₹20,000 crore, council member Sushil Modi told reporters.

“There was unanimity that in 28% category there should be only sin and demerit goods,” Modi, deputy chief minister of Bihar, said, adding rates on 177 items were reduced to 18%.

For luxury and so-called sin or demerit goods, there is an extra levy on the top rate. Alcohol, real estate, electricity and petroleum are exempt and are taxed under earlier system.

The GST subsumed a string of state levies and taxes but has faced a bumpy ride since its July 1 launch, especially on account of complex monthly tax-filing that is said to have raised the cost of doing business for shopkeepers and small businesses.

The GST Council has taken several steps to ease the compliance burden of small business.

GUWAHATI:

Finance minister Arun Jaitley at the GST Council meet. Impact of the GST rejig on the government’s revenue No of items that have been brought out of the 28% tax slab 18% GST to be levied on chewing gum, chocolate, aftershave, deodorant, detergent, marble, shampoo and skin creams No of items that remain in the 28% GST slab — mostly demerit, sin and luxury goods Washing machines, air conditioners, paints and cement remain in 28% slab