GST hike: Your spa treatments may get costlier soon
The Goods and Services Tax (GST) Council is considering a major overhaul of tax rates. A Group of Ministers (GoM) formed by the Council is mulling increasing the GST rate to 28% for 58 goods and 24 services. The proposed revision would mostly impact items currently taxed at 18% or 12%. High-end handbags, luxury sunglasses, spa treatments and certain cosmetic procedures will be among the affected goods/services.
Luxury items under tax review
The proposed list for tax revision also includes aesthetic treatments, botox services, luxury spa and salon offerings. Premium stationery items such as pens above ₹5,000 are being considered for higher taxation. Bicycles worth over ₹50,000 and cufflinks above a certain price threshold may also be taxed at this increased GST rate. The GoM, led by Bihar's Deputy Chief Minister Samrat Chaudhary, plans to reconvene before submitting the final recommendations in November.
Phased implementation and redefinition of luxury goods
The GoM is pushing for a phased implementation of these changes, proposing that certain products be moved to higher tax slabs gradually. An official said about 10% of items from the 18% slab and 5% from the 12% slab could be completely shifted to the 28% rate. This would depend on sale price thresholds set by the fitment committee. The group has also favored redefining luxury goods with a separate officials' committee looking into item categorization and their price limits.
Essential items to remain unaffected
The proposed tax adjustment won't impact essentials for the common man. An official stressed the aim is to target luxury products that currently fall in lower tax brackets, admitting the wide pricing spectrum of some goods. This review could result in a significant rise in items under 28% GST slab, possibly boosting overall GST revenue. However, officials warn it's too early to judge the financial impact of these changes.
