GST Council Meet: Lower Tax Rates on 213 Items, Eating Out to Get Cheaper

Report Arasu in India

Detergent, marble floorings, toiletries are among items shifted to the 18% tax bracket from 28%; six items go from 5% to zero tax.

The Goods and Services Tax Council on Friday sharply reduced to just 50 the number of items in the highest tax rate of 28%. At its 23rd meeting in Guwahati, chaired by Union Finance Minister Arun Jaitley, the Council also staggered the return filing process, reduced the tax rates on restaurants and expanded the Composition Scheme for small firms.

Tax experts termed the Council’s decisions — virtually upending the original GST structure — as a bold decision ahead of the Gujarat elections. The decisions are expected to win over businesses struggling to cope with the transition to the new indirect tax system.

The Council decided to reduce the tax rate on 178 of current 228 items from 28% to 18%, with effect from November 15. Items with tax rates reduced to nil from 5% include guar meal, sweet potatoes, and dried or frozen fish.

“All restaurants will be taxed at 5%, except those in hotels with a tariff of ₹7,500 or more, which will be taxed at 18% with input tax credit (ITC). Outdoor catering will be taxed at 18% with ITC,” Mr. Jaitley said.

The items in the 28% slab that have got cheaper include wires, cables, insulated plugs, furniture, bedding, mattresses, suitcases, detergents, shampoo, perfumes, lamps, wrist watches, and slabs of marble and granite. Items that have seen their tax rate reduced to nil from 5% include guar meal, sweet potatoes, and dried or frozen fish.

“Today, there are 228 items of goods that are in the 28% slab,” Mr. Jaitley said speaking to a reporter after the meeting. “The fitment committee, following the last meeting, looked at rationalizing these and gave suggestions.”

“Items on which cess are currently being applied, such as luxury, sin, and some white goods, will continue to be taxed at 28%,” Mr. Jaitley added. “Two items have been reduced from 28% to 12%.”

“The consumer products industry welcomes this change,” Aashish Kasad, Partner and Consumer Products & Retail Sector Tax Leader, EY India said. “These revisions are expected to reduce prices and increase consumption and thereby bring growth.”

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