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GST: Concept of luxury expands; paints, chocolates under 28%

Viveat Susan Pinto/Mumbai 20 May 17 | 02:38 AM

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Do chocolates, chewing gum, paints, leather jackets and everyday stationary items such as water colours count as luxury goods? The Goods and Services Tax (GST) Council says Yes, putting all these in the highest slab, of 28 per cent.

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Effectively, these and many more regular items such as butter, sauce, mustard flour, instant coffee, condiments, hair dyes, shampoos and shaving products will share space with the likes of yachts, jets and racehorses.

Harsh Mariwala, chairman, Marico, maker of brands such as Parachute and Saffola, says products not seen as being essential in nature have been slapped with a higher tax under GST. "I am sure the GST Council would have looked at the merits of every product before clubbing under a certain bracket. Those that are not pressing in nature have been taxed at the highest level."

Around 80 per cent of consumer goods, he says, have been kept in the 18 per cent and below slabs, indicating governments have been conscious not to burden the common citizen with inflationary pressure. "Around 12-13 per cent are those goods where the tax slab is 28 per cent. I think that is acceptable."

Among those that have made it to 28 per cent are cosmetics and beauty products, room air fresheners, deodorants and oral care products such as dental floss.

Kansai Nerolac's managing director, H M Bharuka, says paints in the highest slab is detrimental to the business. "It has come as a shock to us," he said. "Paints are very basic, needed to protect a home from wear and tear. The Council has perceived it to be ornamental. In other words, decorative has been taken in the literal sense. The result is that we find paints under the highest tax slab, which will mean product prices will shoot up."

Apurva Parekh, executive director, Pidilite Industries, maker of brands such as Fevicol and Dr Fixit, says: "While adhesives fall under the 18 per cent bracket, some sealants and industrial chemicals will come under 28 per cent. So, yes, one part of our portfolio will be taxed higher than the other. We do not intend to change our product mix because of this."

Bitter taste

The GST Council has put luxury goods in the highest slab, of 28 per centMany more regular items such as butter, sauce, mustard flour, instant coffee, condiments, hair dyes, shampoos and shaving products will share space with the likes of yachts, jets and racehorsesProducts not seen as being essential in nature have been slapped with a higher tax under GST, say product makersAmong those that have made it to 28 per cent are cosmetics and beauty products, room air fresheners, deodorants and oral care products such as dental flossProducts not seen as being essential in nature have been slapped with a higher tax under GST, say experts

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