GST Council Finalises Rates For Most Items
Capital goods, soaps and hair oil will be taxed at 18 percent.
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The Goods and Services Tax (GST) Council has finalised rates for around 1,150 items of the total of 1,211, Finance Minister Arun Jaitley said on Thursday, the first day of a two-day GST Council meeting being held in Srinagar. The rates for remaining goods and all services will be discussed and finalised on Friday, he said.
Here’s a breakup of the goods falling under various tax slabs...
- 43 percent items will be taxed at 18 percent.
- 19 percent fall under the 28 percent tax rate.
- 17 percent are in the 12 percent tax bracket.
- 14 percent items fall under the 5 percent tax rate.
- 7 percent items are on the exemption list.
Sugar, tea, coffee, sweets and edible oil will be taxed at 5 percent tax bracket, said Hasmukh Adhia, revenue secretary, Ministry of Finance. Coal will also be taxed at 5 percent as opposed to the current incidence of around 10 percent.
Goods such as hair oil, toothpaste and soaps will fall in the 18 percent category. All capital goods and industrial intermediates will also fall in the 18 percent bracket and this will help bring down inflation, Jaitley said.
Cereals, milk and jaggery will be exempted from any tax. The rates for gold, beedi, cigarette, agricultural implements, footwear, textiles and biodiesel have not been decided yet.
Tax incidence on cars will remain the same, according to a senior government official. All cars will be taxed at 28 percent and a 1 percent, 3 percent or 15 percent cess is likely to be levied based on current tax incidence, the official said. Motorcycles above 350cc engine capacity will face a cess of 3 percent, the official said.
Rates on services have not been finalised yet, according to Manish Sisodia, deputy chief minister of Delhi.
Everyday Products Cheaper, Say Tax Experts
Tax experts said while food items may become cheaper, prices of a large number of products could go up.
The broad rate structure of GST has become clear with very few items being exempted, most of them being in the 18 percent category and a large chunk under the 28 percent category. Accordingly, while food stuff and unprocessed basic items like tea, coffee and edible oil may become cheaper, a large number of items which will be under 28 percent bracket would become costlier.Bipin Sapra, Tax Partner, EY India
Today has been a very fruitful day for GST Council as largely on all products there has been a consensus on rates. Also, it has been reduced on several products used by common man. For example hair oil, toothpaste, soap (from 28 percent to 18 percent). In fact, foodgrains are exempt. So really a good news till now on overall announcements made.Anita Rastogi, Partner, Indirect Tax, PwC
The news that coal, edible oil, coffee, tea will be at 5 percent is a good news, though I expect some carve out from this at a higher rate in some categories. Mass consumption goods like hair oil, soaps, toothpaste at 18% is also welcome news as the rates will come down and drive consumption. Capital goods at 18 percent is another welcome move, a good impetus for capex spending. What we need to watch out for is the fact that 19 percent of goods will be in 28 percent category, which is a significant number of goods. Services will be debated tomorrow (Friday), which again could be 3-rate structure.Harishanker Subramaniam, National Leader, Indirect Tax, EY India
GST Rules
The council approved seven rules in today’s meeting in Srinagar for input tax credit, valuation, composition scheme, registration, invoices, payments and processes. The legal committee is working on the remaining two relating to transition provision and returns, Jaitley said.
EY India’s Subramaniam said key rules like transition are also expected to be finalised tomorrow and “this will have a bearing on now stocking/de-stocking will behave in the coming weeks”. These positive developments are another key step in the direction of July implementation, he said.
The GST Council had finalised a four-tier rate structure of 5, 12, 18 and 28 percent, with an additional levy or cess on demerit goods, which will fall under the highest tax slab. On April 7, it passed the five GST bills – Central GST, State GST, Integrated GST, Compensation Bill and the Union Territories GST.
The blanket tax system is expected to be rolled out from July 1. However, some company leaders believe that a July implementation seems unrealistic with most of the small and medium businesses still not registered on the GST Network.
Also Read: GST Countdown: ‘Will Have To Burn The Midnight Oil To Meet Deadline’