New Delhi: The GST Council on Friday decided to cut tax rate on a wide range of daily-use items - from chewing gums to detergents -- to 18 percent while keeping only 50 items, mostly demerit, sin and luxury goods in top 28 percent bracket, Bihar Deputy Chief Minister Sushil Kumar Modi said.
The all-powerful Council pruned the list of items attracting the top 28 percent tax rate to just 50 from 227 previously. In effect, the Council, in its 23rd meet today, cut rates on 177 goods.
"There were 227 items in the 28 percent slab. The fitment committee had recommended that it should be pruned to 62 items. But the GST Council has further pruned 12 more items," Sushil Modi told reporters on the sidelines of the ongoing Council meeting.
He said all types of chewing gum, chocolates, preparation for facial make-up, shaving and after-shave items, shampoo deodorants, washing powder detergent and granite and marble will attract lower 18 percent tax rate.
"There was unanimity that in 28 percent category there should be only sin and demerit goods.
So, today the GST Council took a historic decision, that in the 28 percent slab there will be only 50 items and the remaining items have been brought down to 18 percent," he said.
Paints and cement have been retained in the 28 percent tax bracket, he said. "Luxury goods like washing machines and air conditioners have been retained at 28 percent."
The decision taken by the GST Council will have a revenue implication of Rs 20,000 crore annually.
The GoM had earlier suggested slashing tax rate to 1 percent for manufacturers and restaurants opting for the scheme from 2 percent and 5 percent, respectively.
It was in favour of doing away with the tax rate distinction between AC and non-AC restaurants, those which are not covered under the composition scheme and tax them at a flat 12 percent.
Currently, non-AC restaurants are taxed at 18 percent.
It also suggested that eating out at hotels that have room tariff of more than Rs 7,500 should attract a uniform 18 percent rate instead of any separate category for 5-star hotel, which currently falls under the 28 percent bracket.