By : Akhil Gopakumar
GST Rates in India – A complete guideline
The GST rates (Goods and Services Tax) has been finalized for almost all items by the GST Council led by Finance Minister Arun Jaitley on June 11 when the council concluded its 16th meeting. Most of the goods and services have been listed under the four broad tax slabs- 5%, 12%, 18% and 28%. GST rates for 66 items has also been revised.
With GST rates to be implemented from July 1, this is the ideal time to check if your monthly budget will be affected under the new tax regime. The GST council has also exempted some products from tax. So we have gathered a list of goods and services that will become cheaper or costlier once GST comes into effect.
Items exempted from GST
Mostly food items have been exempted from any of the tax slabs. Fresh meat, fish, chicken, eggs, milk, butter milk, paneer, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, all kinds of salt, jaggery and hulled cereal grains have been kept out of the taxation system. Prices of food grains, especially wheat and rice, will come down as they are also exempted from the GST.
Bindi, sindoor, kajal, palmyra, human hair and bangles also do not attract any tax under GST rates.
Drawing or coloring books, stamps, judicial papers, printed books, newspapers also fall under this category. Other items in the exempted list include jute and handloom, bones and horn cores, hoof meal, horn meal, bone grist, bone meal, etc.
Grandfathering service has been exempted under GST. Services provided by veterinary clinics are also exempted from GST.
Hotels and lodges with tariff below Rs 1,000 also comes under this category, which means a low budget holiday will become cheaper once gst rates come into effect.
The GST Council has also decided not to tax metro travel, religious travel and Hajj travel under the new tax structure. There won’t be any tax on healthcare and education under the new taxation system.
Rough precious and semi-precious stones will attract GST rate of 0.25%.
Items attracting 5% GST rates
An array of food items such as fish fillet, packaged food items, sweets, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, cashew nut, cashew nut in shell, raisin, ice and snow will be priced at 5% tax.
Some items in the fuel category like bio gas, kerosene and coal are in this slab. Electricity generation will get cheaper as the GST council has brought down the tax on coal to 5% from the current tax rate of 11.69%.
Items from the health industry in this category include medicine, insulin and stent. A tax rate of 5% on life-saving drugs that treat diseases like malaria, HIV-AIDS, tuberculosis and diabetes is expected to slightly increase prices of these drugs. Until now, these drugs were exempted from excise and customs duties. However, a few states were charging 5% tax on these drugs which will now be subsumed under GST. Under GST, there will be a 12% on formulations and 18% on APIs (active pharmaceutical ingredients) – the bulk drugs that go into the making of final pills and tablets.
Other items in this slab are agarbatti (incense sticks), kites, postage or revenue stamps, stamp-post marks, first-day covers, lifeboats, apparel below Rs 1000 and footwear below Rs 500.
Transport services like railways and economy class air travel fall under this category. Cab fares for bookings made on cab aggregators like Ola and Uber also fall under this category.
Small restaurants will be under the 5% category because their main input is petroleum, which is outside GST.
Gold has been taxed under a separate slab of 3%.
Items attracting 12% GST rates
Edibles like frozen meat products, butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, namkeen, ketchup and sauces will attract 12% tax.
Cellphones, apparels above Rs 1000, cutlery items like spoons, forks, ladles, skimmers, cake servers, fish knives, tongs fall in this slab.
Ayurvedic medicines and all diagnostic kits and reagents are taxed at 12 per cent.
Utility items like tooth powder, umbrella, sewing machine and spectacles and indoor game items like playing cards, chess board, carom board and other board games like ludo are in this slab.
Non-AC hotels, hotel room whose tariff is between Rs 1,000 – Rs 2,500, business class air ticket, fertilisers, work contracts will fall under 12% GST tax slab.
Items attracting 18% GST rates
Consumables listed under the 18% category are biscuits, flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasonings and mineral water.
Items like printed circuits, camera, speakers and monitors, printers (other than multi function printers), electrical transformer, CCTV and optical fiber are priced at 18% tax under GST.
Other items in this slab include footwear costing more than Rs 500, bidi leaves, tissues, envelopes, sanitary napkins, note books, steel products, kajal pencil sticks, headgear and its parts, aluminium foil, weighing machinery (other than electric or electronic weighing machinery), bamboo furniture, swimming pools and padding pools.
AC hotels that serve liquor, hotel room whose tariff is between Rs 2,500 – Rs 5,000, telecom services, movie tickets below Rs 100, IT services, branded garments, financial and banking services, insurance services will attract 18% tax under GST.
Items attracting 28% GST rates
Edibles under this tax slab include chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala and aerated water.
Personal care items like deodorants, shaving creams, after shave, hair shampoo, dye and sunscreen are in the highest tax slab as well.
Bidi, paint, wallpaper and ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers and hair clippers have been clubbed together in this slab.
Automobiles, motorcycles and aircraft for personal use will attract 28% tax – the highest under GST system. All cars fall in the ‘luxury bracket’ of GST rates. However, depending on their size, extra cess will be levied.
Small cars or cars under four-metre length powered by a petrol engine not greater than 1.2-litre or a diesel engine not greater than 1.5-litre by displacement will be taxed at 28%. For petrol cars, the effective tax rate will be 29% and for diesel cars the effective tax rate will be 31%.
For mid-size, luxury cars and SUVs the effective tax rate will be 43%. The prices of SUVs will come down as they are currently taxed at 48-55%.
The GST council also decided that it would tax hybrid vehicles at a rate as high as 43%. This would be significantly higher than the prevailing tax of about 29% on such cars.
5-star or luxury hotels where the tariffs are more than Rs 5000, race club betting and movie tickets above Rs 100 are under the 28% category.
The GST council has decided to meet next on June 18, 2017 to finalize on GST rates for lottery tickets, e-way bills etc.