Making the biggest change in the four-month-old goods and services tax regime, the GST Council on Friday moved 80 per cent of items in the top 28 per cent tax bracket to lower rates. When GST was rolled out on July 1, more than 250 items were in the highest tax bracket. The top tax rate is now restricted only to luxury and demerit goods like pan masala, aerated water and beverages, cigars and cigarettes. All restaurants will be levied GST at 5 per cent, without input tax credit (ITC) benefits. So, only luxury and sins goods are now only in the highest tax bracket and items of daily use are shifted to 18 per cent.
The government also reduced the levy under composition scheme for traders and industry to 1 per cent of turnover, with further easing for those selling exempted goods. These revisions in rates are expected to reduce prices and increase consumption and thereby bring growth for the consumer products and retail industry," EY India said in a statement. More than the revenue considerations, the move is aimed at cheering consumers and placating traders and small businesses who have been complaining of higher compliance burden.