GST rates announced milk and cereals to be exempted from taxes
The Goods and Services (GST) Council on Thursday agreed on the fitment of almost all commodities in the various tax slabs under the new indirect regime to be rolled out on July 1. Milk, cereals (unpackaged and unbranded), and jaggery will be exempt from any GST, while sugar, tea, coffee (except instant), and edible oil will be taxed at 5%. Common use items such as soap, toothpaste, and hair oil, which currently attract a tax rate of 22-24%, will be taxed at 18%. Coal, which is currently taxed at 11.7%, will attract a GST rate of 5%.
Consumer durables will come under the 28% tax bracket, down from the current 30-32% rate. Capital goods and industrial intermediaries will be taxed at 18%. According to sources, small petrol and diesel cars will be taxed at 28% with small petrol cars attracting a cess of 1% and small diesel cars 3%. Luxury cars will attract a 15% cess in addition to 28% GST. 350 cc bikes will attract a cess of 3%. However, the official said there would be no additional tax incidence on these goods from their current rate of taxation.
“There are 1,211 items in the four digit code that exists now… fitment needs to be done for all,” Union Finance Minister Arun Jaitley said at a press conference following the first day of the meeting. “We discussed and approved these items today. There are six categories that need more discussion. These will be taken up on Friday.” Stressing that no commodity would witness an increase in taxation, Mr. Jaitley said this was an important step towards rollout of GST from July 1.
The six categories to be discussed include bidis/cigarettes, footwear, gold, and agriculture implements. Tax rates on services will also be part of the agenda on Friday. Mr. Jaitley said that in case the Council is unable to complete discussions, it might decide to meet again in the “near future.” Mr. Jaitley said that despite the reduction in tax of some commodities, efficiency in administration will help curb evasion and increase tax buoyancy, leading to improved revenue collection.
Revenue Secretary Hasmukh Adhia said that of the over 1,200 items to be considered under GST, 7% have been put under the exempt list, 14% items will attract a tax rate of 5%, 17% of the items will be taxed at 12%, and 43% will be taxed at 18%. “Only 19% items will be in the 28% tax slab, while 81% of items will be taxed at 18% or lower,” he said. “On rates, the categorisation of several consumer products under 18% is good news,” Pratik Jain said.
Source : http://www.thehindu.com