Only 50 luxury and 'sin' items find their place in GST's highest slab

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In what is one of the biggest reductions since GST came into effect from July 1, the GST Council has today reduced tax rates on more than 175 items.

The council, which is currently meeting in Guwahati, has decided to cut keep only 50 luxury and 'sin' goods like tobacco in the highest slab. Meanwhile, tax rates have been slashed from the existing 28% on a host of consumer items such as chocolates, chewing gum, shampoo, deodorant, shoe polish, detergents, nutrition drinks, marble and cosmetics.

"Only 50 items will face 28% rate," Bihar finance minister Sushil Modi told reporters on the sidelines of the ongoing Council meet.

"There were 227 items in the 28% slab. The fitment committee had recommended that it should be pruned to 62 items. But the GST Council has further pruned to more items. Now all types of chewing gum, chocolates, preparation for women cosmetics, shaving and after-shave items, deodorants, washing powder detergent and granite and marble. All these items have been put in the 18% category," Modi said.

Paints, cement have been retained at 28%. Luxury goods such as washing machine and air conditioners will still be taxed at 28%.

The tax cuts will have a revenue implication of about Rs 20,000 crore.

Even as there is a consensus that slowly, the 28 per cent slab should be brought to 18 per cent, the council is still skeptical because of a huge revenue implication.

In the next few hours, the Council is expected to take crucial decisions to make composition scheme more attractive, improve compliance burden, and it may explore the possibility of including real estate under GST.
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