GST, the most significant tax reform has consolidated a dozen of state and central duties into one single levy. All goods and services have been fitted into four broad slabs – 5%, 12%, 18% and 28% —along with a cess on luxury, and demerit goods such as tobacco, pan masala, and aerated drinks.
In its 23rd meeting in Guwahati, the Goods and Services Tax (GST) Council decided to slash rates on more than 175 items, from the existing rate of 28%, for the benefit of market and consumers. It is one of the biggest tax rearrangement since the new system came into effect from July 1.
With this news, we have decided to bring to you an encapsulation of the changes in GST rates. The following new rates were applicable w.e.f 15 November.
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- 28% to 18% :
- 178 items have been transferred from 28% to 18% bracket. Only luxury and sin goods are now left in the highest tax bracket including pan masala, aerated water, and beverages, cigars and cigarettes, tobacco products, cement, paints, perfumes, AC’s, dishwashing machine, washing machine, refrigerators, vacuum cleaners, cars and two-wheelers, aircraft and yacht.
- The new 18% list also include wire and cables, furniture, mattress, trunk, suitcase, detergents, shampoos, hair cream, hair dyes, make-up, fans, lamp, rubber tubes and microscope.
- Chewing gum, chocolates, coffee, custard powder, marble and granite, dental hygiene products, polishes and creams, sanitary ware, leather clothing, artificial fur, wigs, cookers, stoves, after-shave, deodorant, detergent and washing powder, razors and blades, cutlery, storage water heater, batteries, goggles, wrist watches and mattress are among the products on which tax rate has been cut from 28% to 18%.
- 28% to 18% :
- Tax on wet grinders and armored vehicles was cut from 28% to 12%.
- 18% to 12% : 13 items have been shifted to 12% from 18% GST bracket including condensed milk, refined sugar, pasta curry paste, diabetic food, medical grade oxygen, printing ink, handbags, hats, spectacles frame and bamboo/cane furniture.
- 18% to 5%: Six items have been moved from 18% to 5% bracket including puffed rice chikki, flour of potatoes, chutney power, fly sulphur recovered in refining crude and fly ash.
- 12% to 5% : Eight items including Tax on idli dosa batter, finished leather, coir, fishing net, worn clothing and desiccated coconut has been shifted from 12% to 5%.
- 5% to Nil: Six items including Guar meal, hop cone, certain dried vegetables, unworked coconut shell and fish would attract nil GST tax as against 5% now.
More Challenges for Restaurants
Currently, 12 % GST on food bill is levied in non-AC restaurants and 18% in air-conditioned ones. 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% tax is levied on all restaurants both AC and non-AC.
This will increase restaurants’ capital requirements and operating costs, and this will shoot up prices everywhere. Restaurants in star hotels that charge Rs 7,500 or more per day room tariff will be levied 18% GST but ITC is allowed for them. While those charging less than Rs 7,500 room tariff will charge 5% GST with no ITC benefit.
Prices of a variety of consumer goods are expected to come down after this slashing of rates. These new rates amidst Himachal & Gujarat elections are expected to provide a big relief to consumers and businesses in the economic slowdown.
Are you satisfied with this GST rejig? Do Share your opinion in the comments below!1