Goods and Services Tax (GST) council has declared a major change in the tax slab rates on over 177 items that were imposed 28% post GST implementation. As per new reform, now only 50 items out of 227 under sin and luxury goods will be charged 28%; others will have to pay only 18% or less. These rates will be applicable from 15 November 2017.
What will be cheaper now after GST Reform?
After slashing GST rates on over 177 items, we may see cheaper products like shampoo, deodorants, detergents, chocolates, juices, and even cosmetics.
Eating out in restaurants will also become cheaper as restaurants who don’t claim tax credits will have a fixed rate of 5% while catering business will be at 18%. Hotels which provide rooms below Rs.7500/- will be charged only 5%.
Bihar’s Finance Minister Mr. Sushil Modi told, “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.”
“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 to more items. Now all types of chewing gum, chocolates, preparation for women cosmetics, shaving and after-shave items, deodorants, washing powder detergent and granite and marble. All these items have been put in the 18 per cent category,” he further added.
Other than these; fire extinguisher, watches, blade, stove, mattress has been reduced to 18% from 28% and fly ash and fly ash brick GST rates slashed from 18% to 5%. Pasta, jute and cotton hand bags will be imposed 12% now.
Which items have been retained at 28% after Changes in GST?
The GST council meeting was held at Guwahati and they decided that only luxury goods and sin items will be imposed 28% GST. Luxury items include ACs, washing machines, TVs, etc. Sin goods like Paints, cement, tobacco and cigarettes will also be charged 28%.
What will be the impact of this GSR reform?
The implementation of GST itself has costed a revenue loss of Rs.60,000 crores to the center government and Rs.30,000 crores for the state government. Moreover, this major GST reform will further add to a revenue loss of Rs.20,000 crores.
Initiation of this reform itself will add Rs.1.5 crores as composition scheme.
As of now, GST doesn’t seem to have a smooth road for the government and the taxpayers, but as more awareness and willingness in accepting GST takes place, it would help things turn around in longer run.