Mumbai, November 15: The new tax rate will kick in from today over all restaurants and hotels. The Centre has reduced the Goods and Services Tax (GST) on both AC and non-AC restaurants to 5% from earlier 18% and 12% respectively.
Finance Minister Arun Jaitley stated that the drop in tax rates is due to restaurants not passing on ITC benefits to customers. He also added that the council has been reviewing rates from time to time.
Notably, the tax rates of nearly 178 daily use items which include chewing gum, chocolates, preparation for facial make-up, shaving and after-shave items, shampoo, deodorants, washing powder detergent, granite, and marble will attract 18% tax rate. The GST Council decided to reduce tax rates on a wide range of items from 28% to 18%.
Mass consumption items like, shampoo, deodorants, detergents, hair cream, dyes, instant coffee, chocolates, shaving and razor blades, chewing gums which were earlier in the 28 per cent tax slab, will now attract 18 per cent tax. FMCG companies like HUL, Patanjali, Dabur have already said that they will pass on the benefits of lower GST to their customers.
Tax rates on products like fans, pumps, lamps, switches, cables & wires, batteries have also fallen to 18 per cent from 28 per cent earlier. Also, some products, which were earlier attracting 18 per cent GST, will now attract 12 per cent GST from today. These include condensed milk, refined sugar, sugar cubes, pasta, spectacle frames.
The Goods and Services Tax implemented from July 1, has 5 tax slabs of 0%, 5%, 12%, 18% and 28%. Four months after the GFT was rolled out, the panel headed by Union Finance Minister Arun Jaitley looked at the most comprehensive overhaul of rates, easing returns filing and providing more relief to small and medium enterprises.