The decision was taken at a "close-door" meeting of GST Council in Guwahati today.
The GST Council has chose to keep only 50 items, mostly luxury goods, in the top 28 per cent bracket, Bihar's Deputy Chief Minister Sushil Kumar Modi, who heads the Group of Ministers panel for tackling Information Technology-related glitches, told news agency PTI.
The Goods and Services Tax (GST) Council, which has been holding its two-day meeting in Guwahati, reduced the tax rate of almost 175 items from 28 per cent; however, 50 luxury and "sin" goods, including tobacco, will remain in the highest slab, according to media reports on Friday.
According to Divyesh Lapsiwala, Tax Partner, EY India: "Rate reduction for 200 plus goods and services may be suggestive of the fact that there is good buoyancy in tax collections, promoting a rate rationalisation".
Mr Modi further said that the revenue implication of these will be approximately Rs. 20,000 crore. Value Added Tax (VAT) will continue to be charged for alcohol, which does not fall under GST. Jaitley informed that GST rates in respect of restaurants including both AC and non-AC categories have been reduced to uniform five per cent from the existing 18 %.
"Tax rate on 13 items has been reduced from 18 per cent to 12 per cent, while tax rates have been reduced to 5 per cent on six items from 18 per cent. Tax rate on 8 items has decreased from 12 to 5 per cent".
The panel also recommended lowering tax rates for manufacturers and restaurants under the composition scheme to 1 per cent. But with no input tax credit, several experts said restaurateurs may end up increasing menu prices. The GST Council is also reviewing the need to file three income tax returns every month in a bid to make the filing cycle more taxpayer friendly. "But the PM Modi-led government at the Centre has imposed the Gabbar Singh Tax", Rahul Gandhi said at an election rally in poll bound Gujarat. Rate has been cut to 18% from the highest slab of 28% on items such as chewing gums, detergents, chocolates, marble, granites, shaving and after-shave items, deodorants, and many more. "Why is electricity and petrol kept out of GST?" he said.