GST rates set to roll out from July 2017

With the clearance of pending rules including transition provisions and returns by the Government and the GST council, the new tax regime GST (Goods and Services Tax) is set to roll out all over India from July 1, 2017. As per Constitutional amendment stipulations all the states must pass SGST bill by September 15, 2017, failing which they will lose their taxation power. Till 15^th June 2017, 24 States and Union territories have passed State GST (SGST) Act in their respective assembles.

The GST  implementation would replace multiple types of Central and State taxes on goods and services like Central Sales Tax, Central excise duty (Cenvat), VAT, Entertainment tax, Luxury Tax, Entry Tax, Octroi, Purchase tax and State Surcharges etc. as a single tax. The business entities who have registered under earlier tax systems shall compulsorily register their business under GST system.  The amount of tax collected under GST will be shared between the Central and the State Governments in equal proportion which will be named as CGST and SGST rates.

The GST will have a 4-slab structure viz. 5%, 12%, 18% and 28%. As per announcement of finance ministry, 19 % items fall under 18% slab, 43% items fall under 18% slab, 17% items fall under 12% tax slab, 14% items fall under 5% tax slab and 7% items come under 0% tax slab. The finance ministry on June 15, 2017 (Thursday) released a list of supplies wherein GST incidence will be lower than the current taxes. Besides, under the composition scheme for traders, manufacturers and restaurants, the threshold limit was increased up to Rs.75 lakh against Rs.50 lakh earlier.

Zero Tax (No Tax) items

Several essential items which constitute 50% of Consumer Price Index (CPI) inflation basket are exempted from GST (attract zero tax/No tax).The following items falls under this category.

Fresh meat, fish, chicken, eggs, milk, curd,Lassi, unpacked Paneer, natural honey, fresh fruits, fresh vegetables, unbranded flours (like atta,maida besan), bread, Prasad, bindi, Sindoor, Kajal, bangles, printed books, newspapers, handloom, Jute, unpacked cereal grains (like  rice, wheat etc.), palmyra jaggery, salt(all types), children’s picture, drawing or colouring books, human hair, Bones and horn cores, bone grist, hoof and horn meal, Education services, Health services.

 The services like Hotels and lodges with tariff below Rs.1000.00 and certain services where an old rule continues to apply to some existing situations while a new rule will apply to all future cases (called grandfathering services).

5% GST (The goods of mass consumption)

Goods: Incense Stick (Agarbatti), Domestic LPG/Bio gas, Processed food items,roasted coffee beans, packed Paneer, Babies milk food, cream, skimmed milk powder, branded paneer, frozen vegetables, fish fillet, coffee, tea, spices, sugar soaps, toothpaste, edible oil, hair oil,  pizza bread, rusk, sabudana, PDS kerosene, coal, medicines, stent, lifeboats, Cashew nut, Raisin, Ice and snow, Insulin, Kites, Coal, Coir mats, matting and floor covers, Apparel (below Rs.1000) and footwear (below  Rs.500.00)

Services: Transport services (including Railways, air transport), small restaurants (restaurants with an annual turnover of less than Rs. 75 lakh will be able to avail of a composition scheme and pay a flat tax of 5% (2.5% central GST and 2.5% state GST). Outsourcing of job work in sectors like diamond, leather, textiles, jewellery and printing, where workers take the work home has been reduced to 5%.

12% GST

Manufactured goods: Apparel above Rs.1000, frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Ketchup & Sauces, pickles, chutney,preparations of vegitables, Bhutia, Namkeen, Ayurvedic Medicines,  umbrella, mobiles, sewing machine, cellphones, all diagnostic kits and reagents, Exercise books and note books, Cutlery  items, Spectacles, corrective, Playing cards, chess board, carom board and other board games.

Services: Non-AC hotels, business class air ticket, fertilizers, Work Contracts

 18% GST

Manufactured Goods: Biscuits (all categories), pasta, cornflakes, pastries and cakes, Curry paste; mayonnaise and salad dressings; mixed condiments and mixed seasonings, footwear costing more than Rs.500, Soap,toiletries,School bags, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, computers, note books, branded garments, Kajal pencil sticks, Tractor components, Electrical Transformer, CCTV, Optical Fiber, Bamboo furniture, Swimming pools and padding pools, Bidi Patta, steel products, printed circuits, camera, speakers and monitors, Headgear and parts thereof, Aluminium foil, Printers [other than multifunction printers], Weighing Machinery [other than electric or electronic weighing machinery).

 Services

Entertainments whereby those cinema tickets costing less than Rs. 100 would be taxed at 18 per cent, AC hotels that serve liquor, telecom services, IT services, and financial services attract 18% GST.

28% GST

Manufactured Goods: Beedis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, electric and electronic weighing machine, washing machine, ATM, vending machines, vacuum cleaner, multifunction printers, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use.

 Services: 5-star hotels, race club betting, movie tickets above Rs.100.00

Impact of GST rates on Cars

The tax on price of cars fall under top slab 28% plus cess in the range of 1 to 15 percent. The small cars with engine less than 1200 CC will attract 1 percent cess. The cars with diesel engine of less than 1500 CC attract cess of 3 percent. The other car model that comprises engine capacity of greater than 1500 CC, SUVs with length more than 4 meters will attract cess of 15 percent.

Disclaimer:

This post on GST is   a sketchy write-up and is not to be treated as meticulous information on the tax slabs. The fitments originally made in the four-slab indirect tax structure are also subjected to revision by the GST council.  For clarifications or interpretations if any the readers are suggested to take the advice from a qualified tax consultant. The author of this post or the website is not responsible for the mistakes, errors, ambiguity, discrepancy, doubts, and inconsistency with law, or quality of information provided here. The liability or claim of any nature on account of information provided here for whatsoever cause is not recognized.