In the biggest GST rejig yet, tax rates on over 200 items, ranging from chewing gum to chocolates, to beauty products, wigs and wrist watches, were on Friday cut to provide relief to consumers and businesses amid economic slowdown. 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. Currently, 12 per cent GST is levied in non-AC restaurants and 18 per cent in air-conditioned ones.
Finance Minister Arun Jaitley said the restaurants were not passing on the input tax credit (ITC) to customers and so the ITC facility is being withdrawn and a uniform 5 per cent tax is being levied on all restaurants. However, 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 Great Rollback
Rs 20,000 crore
The cut in tax will cost the exchequer in revenues annually, said Bihar Deputy CM Sushil Kumar Modi, member of the GST council.
Only 50 items in 28% slab
Only 50 items retained in 28% slab; 178 others move to 18% bracket
Only luxury items and ‘sin’ goods will attract 28% tax Government to take a revenue hit of Rs 20,000 cr annually
Dinning out cheaper
Dining out will be cheaper food at all restaurants, except in starred hotels, will be taxed at 5%, rather than 18%
Daily use items cheaper
Among goods that will no longer be taxed at 28 % are daily use items like shampoo, deodorant, toothpaste, shaving-cream, aftershave lotion, shoe polish, chocolate, chewing gum and nutritious drinks.
18 % slab to 12 %
13 items will move from 18 % slab to 12 %, six from 18 % to 5 %, eight items from 12% to 5%, and six from 5 % to nil