Daily use items in 28% slab may turn cheaper

Some of the daily-use items falling in the 28 per cent GST slab could become cheaper. The government is considering a proposal to classify similar items under one tax rate and lower tax incidence on them.

Some of the key items that currently fall in the highest 28 per cent GST are chewing gum, white chocolate, mustard sauce, custard powder, shampoo and hair cream. The GST Council may decide to fit such items in the lower tax bracket of 12 and 18 per cent at its meeting on Friday.

Official sources said the Council would decide slabs for various items on the principle of classifying similar products under one rate and reduce tax incidence on essential items.

“Most of the stationery items are now under one rate. There would be same approach for other products also,” the official said.

Stationery products such as fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles fall under 18 per cent slab in the new tax regime.
“The government has to ascertain as to what is the right rate for a particular item, depending on its use. Then, there has to be uniformity in similar kind of articles. Similar items should be aligned into one rate, whatever is that rate. Whatever items are falling in similar categories in the HSN classification should generally fall in one bracket,” said Bipin Sapra, partner (indirect tax) at consultancy firm EY.

Industry and trade have maintained that only exceptional items such as bigger cars, aerated drinks and tobacco products should be taxed at 28 per cent. The government has also responded to such suggestions and lowered tax rates in case of many items in the last three months.

At its meeting last Friday, the GST Council decided to bring modelling paste for children amusement, hard rubber waste and stationery items under 18 per cent from 28 per cent levy earlier.

Delhi-based Confederation of All India Traders (CAIT) has asked the government to revisit 28 per cent tax slab.

“Only luxurious and demerit goods should be taxed at 28 per cent and rest of the items should be placed under appropriate lower tax slab,” CAIT national secretary general Praveen Khandelwal said.

nirbhaykumar @mydigitalfc.com

Nirbhay Kumar