In a major revamp of the GST tax structure, the GST Council on Friday removed 178 items from the highest 28% category while cutting the tax on all restaurants outside starred-hotels to 5% but withdrawing input credit facility for them.
Only 50 products, including luxury items, white goods, cement and paints, automobile, aeroplane and yacht parts have been retained in the top 28% slab.
Despite repeated demands and online petitions however, there was no change in the tax rate for sanitary napkins which continue to remain in the 12% tax bracket. One might argue that they have become a tad bit cheaper compared to pre-GST indirect tax regime when they were taxed at 13.7%. However, it is ironic that while many daily use items like deodrants, detergent, shaving and after shave preparations have become cheaper, menstruating women continue to be taxed for an entirely natural process.
The tax cuts were decided at the 23rd GST Council Meet held on Friday. "The GST Council has decided to slash tax slabs of 178 items from 28% to 18%. It will be applicable from 15th of this month," Union Finance Minister Arun Jaitley said.
West Bengal Finance Minister Amit Mitra earlier told reporters that the loss on account of a hasty and ill-designed GST had resulted in the exchequer losing around Rs 60,000 crore for the Centre and Rs 30,000 crore for the states in just the first three months.
With the latest decisions, GST has been cut on a host of consumer items such as chocolates, chewing gum, shampoo, deodorant, shoe polish, detergents, nutrition drinks, marble and cosmetics.
Luxury goods such as washing machines and air conditioners have been retained at 28%.
Among mass consumption items watches, blade, stove, mattresses have been reduced to 18 per cent from 28 per cent. Rate on pasta, jute and cotton hand bags has been cut to 12% from 18%.
"Thirteen items, which were earlier under 18%, have been brought down to 12%. Six goods have come down from the 18% slab to 5%, eight items have come down from 12% to 5% and six items from 5% to zero tax," Jaitley said.
Eating out has become cheaper as all restaurants outside high-end hotels charging over Rs 7,500 per room will uniformly levy GST of 5%. The facility input tax credit for restaurants is, however, being withdrawn as they had not passed on this benefit to consumers, Jaitley said.
Restaurants in hotels with rooms above Rs 7,500 per day would continue to pay 18% GST with the benefit of input credit.
The GST Council also made changes in return filing procedures to reduce the compliance burden for the small taxpayers. It decided that filing GSTR 3B would continuing till March 31, 2018.
"All taxpayers will continue to file GSTR 3B. In case of small tax payer or nil tax payments, 3B will be simplified so that in two or three steps one can easily file their return," Finance Secretary Hasmukh Adhia told reporters.
"The Council also decided that for this fiscal only GSTR 1 will be filled and because we are running in a backlog -- where we will file return for July only by December 11," he said.
"For taxpayers above Rs 1.5 crore turnover and who have large number of invoices, we do not want to keep their returns pending for a quarter and instead they should file their invoices monthly," he added.
Adhia also said a committee has been set up to examine simplifying the returns pertaining to purchase details that fall under GSTR 2 and invoice matching under GSTR 3.
The Council also decided that penalty for late filing for a 'Nil' tax payer would now be at Rs 20 per day from the earlier Rs 200, and for others it was cut to Rs 50 per day.
The Council deferred a decision on bringing real estate under GST to its next meeting, for lack of time.
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