GST rate cut: Here’s what may get cheaper from tomorrow

Prices of chocolate products, chewing gum and even perfumes and shampoo are expected to come down from tomorrow.

In a move seen to ‘rationalise the rate structure’ the government left only 50 items in the 28% tax slab. The Goods and Services Tax (GST) Council last week cut rates of 178 items from the highest tax slab of 28% to 18% under the GST regime. Changes to the tax rates of these goods will come into effect from 12 am on November 15, the government said.

GST rate for khandsari sugar has been reduced to nil from the earlier 5%. While GST on refined sugar and sugar cubes has been cut to 12% from 18%. This, in turn, is likely to make these products comparatively cheaper.

“GST Council eased rates on many daily use FMCG products such as chocolates, condensed milk, mayonnaise, curry paste, refined sugar and sugar cubes, pasta, chikki, idli-dosa batter, frozen fish, chewing gum, washing powder, shaving cream, blade, shampoo, deodorant, cosmetics, marble, granite, mattress, toothpaste, fire extinguisher, watches and nutritional drinks products are set to become cheaper going forward as the producers have decided to pass on the benefit from lower tax incidence to the consumers,” Care Ratings said in a report dated November 13.

FMCG companies too like Nestle, Hindustan Unilever, Dabur, Amul and GlaxoSmithKline have made it known that they will be passing on the benefits they receive from the lower tax rates to the consumers.

Prices of shampoo, condensed milk and chocolates are expected to become cheaper by at least 5-10%

The GST Council also exempted a few goods from IGST like – ‘lifesaving’ medicines, goods under lease agreements, skimmed milk and specified goods by a sports person of outstanding eminence.

On the services side also, the Council recommended changes in GST rates to provide relief to aviation and handicraft sectors as well as restaurants.

Along with pruning the 28% tax slab the government also mandated that different tax rates on restaurants with respect to AC or non-AC would be slashed to 5%.

“Eating out at restaurants is set to get cheaper with the Council deciding to slash GST rate for the sector to 5%,” the Care Ratings report said.

However since restaurants will not be able to claim input credit tax, reports have pointed out that restaurants might just increase prices of food on their menus.

“The new rate of 5% is applicable without any input tax credit. Outdoor catering would continue to attract GST at 18% with full ITC,” the report said.

source:http://www.zeebiz.com/companies/news-gst-rate-cut-here-s-what-may-get-cheaper-from-tomorrow-31250