 "58 luxury goods and 24 services may face 28% GST slab in upcoming review")
In a significant move towards rationalising tax rates, a group of ministers (GoM) appointed by the GST Council is considering elevating 58 goods and 24 services to the 28 per cent Goods and Services Tax (GST) slab. This change would affect items currently taxed at 18 per cent or 12 per cent.
Items under review for higher GST rates
Among the goods and services potentially impacted are high-end handbags, luxury sunglasses, and specific cosmetic procedures. The proposed list includes aesthetic treatments, Botox services, luxury spa and salon offerings, as well as premium stationery such as pens priced above Rs 5,000. Other items under scrutiny for higher taxation include bicycles valued over Rs 50,000 and cufflinks exceeding a certain price threshold.
The GoM, led by Bihar's deputy chief minister Samrat Chaudhary, plans to convene again before submitting its final recommendations to the GST Council in November. The council will then make a definitive decision regarding these potential changes.
In recent discussions, the group has leaned towards redefining luxury goods. A separate officials' committee is examining the categorisation of items and their corresponding price limits.
Gradual implementation of tax changes
The GoM advocates for a phased approach to implementing these changes, suggesting that select products be transitioned to higher tax slabs incrementally. An official indicated that approximately 10 per cent of items from the 18 per cent slab and 5 per cent from the 12 per cent slab could be fully moved to the 28 per cent rate, based on sale price thresholds determined by the fitment committee.
It's important to note that essential items for the general public will not be affected by this proposed adjustment. An official emphasised that the goal is to target luxury products that currently fall into lower tax brackets, acknowledging the broad pricing spectrum of certain goods.
This review could lead to a notable increase in items classified under the 28 per cent GST slab, potentially enhancing overall GST revenue. However, officials caution that it's premature to assess the financial implications of these changes.
A report from Goldman Sachs Research titled "The Rise of 'Affluent India'" projects that the number of affluent consumers in the country will grow from around 60 million in 2023 to 100 million by 2027, indicating a burgeoning market for luxury goods and services.
(With agency inputs)