Facts about Goods and Service Tax Rates


The government has announced Goods and Services Tax commonly known as GST rates. GST has been planned in a way that there will be a 4-tired structure which the rates that would range from 5% upto 28%. It has been decided that the essential items will have the lowest GST rates whereas the luxury items will have highest GST rates applicable on them. The rates have brought a sigh of relief to a lot of consumers across India. Let us see how which goods fall under which category of GST

• No Tax Items: The Government has decided that the essential items such as salt, food grains, cereals, flour, milk, curd, fresh meat, poultry, fish, handloom items, printed books, etc will not be taxed. Therefore, the GST rate applicable on the above mentioned items will be zero. It should be noted that almost half of the items in Consumer Price Index fall under the category of No Tax Items.

• 5% Tax Items: 5% tax items are the items that commonly used items in any house-hold. These items include coffee, tea, medicine, kerosene, frozen vegetables, etc. The services such as the air transport and rail transport will be placed at 5% GST.

• 12% Tax Items: Items that include cheese, frozen meat products, butter, mobile phones, ayurvedic medicines, sewing machines etc. are included in the bracket of 12% tax items.

• 18% Tax Items: Most of the items will fall under the bracket of 18% tax. The items that are included in this bracket include Ice-cream, pastries, refined sugar, mineral water, cameras, note books, telecom services, steel products, financial services, etc.

• 28% Items: The luxury items that would include yachts or personal aircraft, automobiles, motorbikes, etc. will attract the highest tax rate i.e. 28%. Other items that are included in this 28% bracket are hair shampoo, deodorants, washing machines, vacuum cleaners, air conditioners, dishwashers, refrigerators, vending machines, etc. All 5-star hotels and movie theaters will also come under the 28% tax bracket.

IMPACT of GST on a common man

• The experts say that there will not be much effect of implementation of GST on a common man since most of the items that are essential items fall in the “No Tax” bracket and therefore have been exempted.

• Most of the food items have been placed in “No Tax” bracket or 5% Tax items

• Another good thing about GST is that education and healthcare segments are exempted from tax.

• There are certain decisions still pending such as tax rates on cigarettes, gold, and other items. A decision on these items will be taken by 3rd June 2017.

Reactions from Industry Experts:

Hasmukh Adhia, The Revenue Secretary stated that around 81% of the items will fall below the bracket of 18% tax, whereas the remaining 19% will fall above the 18% or higher tax brackets.
Arun Jaitley, The Finance Minister assured that there will be a certain overall reduction of tax on most of the commodities. He also said that GST is implemented in a way that there would be less impact of inflation. Implementation of GST is expected to bring forth the culture of good taxation practices in India.

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