GST: 28% list to reduce further, sin/luxury goods to remain
The GST Council is not yet done pruning the list of items under the 28% slab. After cutting it down from 227 to 52, it is now targeting the remaining white goods on the list. This includes electronic items like refrigerators, washing machines, ACs and other consumer durables. Once it goes through, it will be a major relief for the masses. Learn more.
What does the present structure look like?
Presently, the GST regime has a four-tier tax structure: 5%, 12%, 18% and 28%. Some items are taxed differently: gold at 3%, rough diamonds at 0.25%, and many daily-use items aren't taxed at all. For sin and luxury goods, there's an additional cess above GST.
How will the current structure change?
The plan is to cut down the 28% list to only sin and luxury goods, sources said. Rationalization will be done based on revenue buoyancy. As of now, some white goods and other items remain in it as the government didn't want to put extra pressure on the fiscal situation. The eventual target is a three-tier structure: 5%, 12% and 18% combined, and 28%.
The next items on the government's radar
Next on the government's radar are items like washing machines, refrigerator, ACs, dish washers, vacuum cleaners etc. Some consumer durables like portable electric lamps, printers and wet grinders are already facing lower taxes.
Move to benefit women, local manufacturers
A main beneficiary will be homemakers: lower taxes on consumer durables will allow them to invest on those items and reduce their workload. The cut in restaurant taxes was too meant to free women from household chores, an official said. Lower levies would also help domestic manufacturers by pushing demand up and discouraging imports, thus turning the focus on local production.
Recently, 28% GST list reduced from 227 to 52
Earlier this month, the GST Council cut the tax rate on 175 items from 28% to 18%, including on common-use products like chocolate, beauty products, aftershave, detergent, powder and marble. This will cause a revenue loss of Rs. 20,000cr, the Council estimated. A major change was the cut in tax rates of AC/non-AC restaurants from 18% to 5%; however, sellers have found loopholes.
