In the biggest GST re-jig yet; tax rates on over 200 items, ranging from chewing gum to chocolates to beauty products, wigs and wrist watches, were 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% to 18%, while a uniform 5% tax was prescribed for all restaurants, both air- conditioned and non-AC, Finance Minister Arun Jaitley said after the GST Council meeting.
Currently, 12% GST on food bill is levied in non-AC restaurants and 18% in air-conditioned ones. All these got input tax credit, a facility to set off tax paid on inputs with final tax. The restaurants, however, did not pass on the input tax credit (ITC) to customers and so the ITC facility is being withdrawn and a uniform 5% tax is levied on all restaurants without the distinction of AC or non-AC. Restaurants in starred-hotels that charge Rs.7,500 or more per day room tariff will be levied 18% GST but ITC is allowed for them. Those restaurants in hotels charging less than Rs.7,500 room tariff will charge 5% GST but will not get ITC. The allpowerful GST Council pruned the list of items in the top 28% Goods and Services Tax (GST) slab to just 50 from current 228. So, only luxury and sins goods are now only in highest tax bracket and items of daily use are shifted to 18%.
Moreover, tax on wet grinders and armoured vehicles was cut from 28% to 12%, he said, adding the tax rate on six items was reduced from 18% to 5%, on 8 items from 12% to 5% and on six items from 5% to nil. 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 power, 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%. The new tax rates will be effective from November 15. The top tax rate is now restricted to luxury and demerit goods like pan masala, aerated water and beverages, cigars and cigarettes, tobacco products, cement, paints, perfumes, ACs, dish washing machine, washing machine, refrigerators, vacuum cleaners, cars and two-wheelers, aircraft and yacht. Items on which tax rate has been cut from 28% to 18% include wire and cables, furniture, mattress, trunk, suitcase, detergents, shampoos, hair cream, hair dyes, make up, fans, lamp, rubber tubes and microscope. Tax rate on condensed milk, refined sugar, pasta curry paste, diabetic food, medical grade oxygen, printing ink, hand bags, hats, spectacles frame and bamboo/cane furniture has been cut from 18% to 12%. That on puffed rice chikki, flour of potatoes, chutney power, fly sulphur recovered in refining crude and fly ash to 6% from 18%. Guar meal, hop cone, certain dried vegetables, unworked coconut shell and fish would attract nil GST tax as against 5% now. Tax on idli dosa batter, finished leather, coir, fishing net, worn clothing and desiccated coconut has been cut to 5% from 12%. In ease compliance burden, the Council relaxed the return filing criteria and also lowered the penalties for late filing.