GST: Tax rate on 178 items reduced from 28 to 18%, hotels, restaurants to go cheaper

GST: Tax rate on 178 items reduced from 28 to 18%, hotels, restaurants to go cheaper

New Delhi, November 11: The Goods and Services tax on various items like household, grocery items and personal care products will now cost less as the goods and services tax on several consumer goods segments is reduced.

The Finance Minister Arun Jaitley said that around 13 items will move from 18 per cent to 12 per cent, six items from 18 per cent to 5 per cent, eight items from 12 to 5 and six items from  5 per cent to nil. Under the Goods and Services Tax, the goods and services are taxed in four brackets that is 5, 12, 18 and 28 per cent.

Arun Jaitley further mentioned that it is has decided to move 178 items from the 28 per cent to 18 per cent tax. The Goods and Services Tax Council on Friday suggested the reduction of tax on categories including detergents, shampoo, deodorants, cosmetics and chocolates up to 18%.

Most of the manufactures appreciated the decision and said that they would pass on the benefits to consumers by either reducing the price tags or increasing the quantity being sold at the existing price.

According to sources, a spokesperson for Fast-moving consumer goods major Hindustan Unilever Limited said the Hindustan Unilever Limited would be happy to pass on the net benefits at the corporate level to the consumers.

When the Goods and services Tax was not rolled out, various departments including shampoo and toiletries, were taxed at between 15% and 24% that included Value Added Tax and state tax. But at the same time, the chocolates and and detergents were taxed at 26-27%.

RS Sodhi, the Managing Director of Gujarat Cooperative Milk Marketing Federation Ltd that sells products under the brand name Amul said that we will pass on the benefits to consumers and it will result in higher consumption.

The goods that will not be taxed 20 per cent GST are the daily used items like shampoo, deodorant, toothpaste, shaving-cream, aftershave lotion, shoe polish, chocolate, chewing gum and nutritious drinks.

Arun Jailtley added that while going to eat in restaurants, all the restaurants and the outside hotels will carry a 5 per cent GST charge.

The air-conditioned restaurants will carry 18 per cent tax with input tax credit while the non-conditioned restaurants will carry 12 per cent tax. While those in starred hotels with room tariffs above 7,500 a night customers will have to pay 18 per cent GST.

The benefit of Input Tax Credit to the restaurants has been cancelled because they were not passing on the benefit to customer.

Sushil Modi who leads a panel on the Goods and Services Tax Network in the GST council said that he new changes will cost around Rs. 20,000 crore this financial year.