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GST rates reduced on 178 items; only 50 items to have 28% tax rate

In a welcome development for people, the GST Council, in its 23rd meeting, has announced to reduce the tax rate on 178 items. These items earlier attracted 28 percent GST, but now, they have been shifted to the 18 percent tax bracket. Earlier, a total of 228 items attracted 28 percent tax under GST, but after considering problems faced by businesses and consumers, the GST Council has decided that the top tax rate of 28 percent will apply only to 50 products. Some of the items that will become cheaper after GST tax reduction include chewing gum, chocolates, preparation for facial make-up, shaving and after-shave items, shampoo, deodorants, washing powder detergent and granite and marble. Items that will continue in the 28 percent tax bracket include paint, cement, washing machines, air conditioners, etc.

The reduction of GST rates on 178 items will hurt the government finances, as it will lead to reduction of around Rs 20,000 crore in tax collections. Various businesses, consumers and industry associations have welcomed the move and said that going forward, more items could be moved to the lower tax bracket. A relief for hotels and restaurants is also being planned by the GST Council. Currently, AC and non-AC restaurants attract 12 percent and 18 percent tax respectively, but the GST Council may change this to 12 percent for all types of restaurants. The GST Council is also expected to ease the compliance rules for small and medium businesses (SMEs).

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