About 58 products and 24 services are being shifted to the 28% GST slab versus the 18% or 12% under the rate rationalisation deliberated by a group of miniters (GoM) and tasked by the GST Council. The products include luxe bags, expensive sunglasses priced more than Rs 10,000, pens costing more than Rs 5,000, bicycles over Rs 50,000 and expensive cufflinks. The services that can be shifted to the highest GST slab are cosmetic procedures for aesthetics including, botox, nail and tatoo parlours, super luxury salon services, and luxury spa services.
The GoM is thinking about the way luxury goods need to be redefined and an official panel that looks at item fitment under the GST is working separately on the item list and the price ceiling. The GoM will meet once before submitting its report to the GST Council in November and the final decision on the products will be made by the council.
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GoM feels that the changes in pricing should be done in phases and the products being moved to higher GST slabs should be gradual. They recommend that 10% of the products from the 18% slab and 5% from the 12% slab could be shifted to 28% completely or more than a certain amount of sale price that will be decided by the fitment committee. At the same time, items that a common man uses and needs will be not be changed. The main idea is to shift products and services that are within the luxury category but are still in the lower tax bracket. The reason behind it is the wide price range for some products. For example, a pen could cost anywhere between Rs 2 and Rs. 70,000-80,000 and if a person can afford the latter, he can definitely pay 28% GST on it and then it becomes a luxury.
This shift will add more items in the 28% GST slabs and would increased the GST collections but it is still too early to know the revenue implications.
