July 1, 2017 will be a landmark day for India as the country will roll out the GST (Goods and Services Tax) scheme from the same date. The biggest reform which is expected to simplify the Indian tax structure was unveiled by our finance minister Arun Jaitley yesterday. GST scheme consists of a four slab structure under which the proposed goods and services will be taxed accordingly. The four slabs are in the figure of 5%, 12%, 18% and 28%. The five services that will attract a taxation of 28% include five-star hotels, racing, movie tickets and betting on casinos and racing. Education and healthcare will be exempted from the tax regime and will continue to remain unaffected. The majority of the services will be part of the tax slab of 18%. Buying television, air conditioners and refrigerators will be costly from July as the proposed GST on the same is 28% as compared to the current rate of 23%. The scheme is expected to have a mixed effect on the industry as the impact of the same will be visible in the upcoming few years. GST Council will now conduct a meeting on June 3 to decide the taxation slab for gold and other important metals along with packaged food, textiles and footwear.
Table of Contents
- 1 What is GST ?
- 2 2 Months Relaxation Time to File GST Returns
- 3 Various GST Tax Slab in India
- 4 GST Tax Rates List for Different Goods
- 5 GST Tax Rates List for Different Services
- 6 Revised GST Tax Rates List
What is GST ?
GST stands for Goods and Service tax, which is going to replace the previous structure of taxes levied by the state and central government. It is a consumption based indirect tax which is charged on sale, manufacturing and consumption on goods and services at the national level. Exports and direct tax like income tax, corporate tax and capital gain tax will not be affected by GST. Upon implementation the GST will take the duel tax system comprising of –
- Central GST or CGST – To be charged by the central government.
- State GST or SGST – To be charged by the state government.
- Integrated GST or IGST – To be charged by central government on the inter-state supply of various goods and services.
2 Months Relaxation Time to File GST Returns
Well, as you all know that with just few days left for the implementation of Goods and Services Tax (GST), the GST Council in its 17th meet on Sunday came out with a big announcement of approving six set of rules, including GST Returns, e-way Bills and Tax Rate on Lotteries and Hotels. The council chaired by Finance Minister Arun Jaitley announced to give 2 months relaxation time for filing the Returns. The council also announced that the official rollout of GST will take place on the midnight of June 30-July 1. He also stated that the further required to come to a consensus related to e-way bills and during such period, an alternative rule will be in implementation.
GST Council not only decided to give a relaxed timetable but it also mentioned to give the exemption from penalties and late fees while filing the returns in the first two months. If experts are to be believed, the norms for filing the returns have been relaxed until September because this move will give ample time to businesses to prepare their IT systems and to comply with the new indirect tax regime. After the Council’s meeting on Sunday, the Confederation of All India Traders (CAIT) also said that it will give more time to traders to prepare themselves in order to comply with GST law.
Not only this, the Council also gave its approval to the anti-profiteering rules, wherein a five member anti-profiteering authority, headed by a retired secretary level officer will decide on levying penalty if the businesses do not pass on the price reduction benefit to the consumers under the GST regime. Finance Minister also said that State-run lotteries will be taxed at 12% and private lotteries will be taxed at 28% respectively. The Council is scheduled to meet again on 30th June,2017-on the eve of GST rollout.
Various GST Tax Slab in India
What’s in store for automobile buyers?
Car buyers who are interested in buying passenger vehicles are bound to get benefits from the GST scheme. The effective duty on such models is expected to be reduced which will ultimately bring the price down. The prices of smaller cars are not expected to show a major change. The good news is that luxury cars are all set to get cheaper. Currently, a taxation of more than 50% is levied on them. Once GST scheme is rolled on, the tax levied will be between 42-45%. Buying a hybrid car will turn out to be an expensive affair after July 1 as the taxation will be levied at the highest rate of 28%. In addition to this, a cess of 15% will also be charged.
TVs, ACs and Refrigerators to cost you more
Consumer durables and appliances are going to cost you more after July 1, 2017. Those who are looking forward to buying a new television set or a brand new refrigerator and washing machine must do the same before GST rates are implemented. Consumer durables and all home appliances will now see a price rise of 4% and more as they will be coming under the tax slab of 28%.
Comparison of the Current Tax Rates with the Proposed GST Tax Rates
|Industry||Current tax rate||GST rate|
|Cigarette||28%+ excise duty||28%+cess|
|Two Wheelers||30-31%||Motorcycles- 31
|Airlines (Economy class)||6%||5%|
|Telecom and Insurance||15%||18%|
|Airlines ( Business class)||9%||12%|
GST Tax Rates List for Different Goods
|Type of Product||5%||12%||18%||28%|
|Dairy Product||Skimmed milk powder|
milk food for babies
Cream & yogurt
Natural honey which is put up in an unit container and bears a registered brand name
|Butter and other fats|
|Edible vegetables||Frozen vegetables and vegetables which are provisionally preserved|
|Edible fruits and nuts||Dry fruits|
|Beverages/hot drinks||Coffee and Tea|
|Products of milling industry |
Starches and Insulin and Malt
|Cereal groats, meal and pellets which are put up in an unit container and bear a registered brand name.|
|Oil seeds and oleaginous fruits||Soya beans, ground nuts|
|Gums & resins||Natural gums, resins, gum resins|
|Sugar and sugar confectionery||Beet sugar, cane sugar||Refined sugar||Molasses Chewing gum / bubble gum and white chocolate|
|Cocoa and cocoa preparations||Cocoa beans whole or broken, raw or roasted||Cocoa butter, fat and oil|
|Preparations of cereals, flour, starch or milk||Pizza bread, Seviyan (vermicelli)||Corn flakes, Pasta, spaghetti, macaroni||Waffles and wafers coated with chocolate|
|Pharmaceutical products||Diagnostic kits for detection of all types of hepatitis||Wadding, gauze, bandages and similar articles||Nicotine polacrilex gum|
|Essential oil, perfumes, soaps and cosmetic||Agarbatti||Tooth powder||Hair oil, toothpaste and soaps||Perfumes and toilet waters.|
|Plastics and articles thereof||Feeding bottles||Self-adhesive plates, sheets, film, foil, etc. of plastics||Floor coverings of plastics, Baths, shower baths, sinks, wash basins,|
GST Tax Rates List for Different Services
|5%||Transport services like railways and airways
Transport of passengers by air in economy class
Supply of tour operators’ services
Selling of space for advertisement in print media
Small restaurants with turnover of Rs. 50 Lakhs
Transport of passengers by motor cabs and radio taxis
|12%||Business class air tickets
Hotels, inns, guest houses, which have a room tariff of Rs.1000 and above but less than Rs.2500 per room per night
|18%||AC hotels which serve liquor to customers
Hotels, inns, guest houses, which have a room tariff of Rs.2500 and above but less than Rs.5000 per room per night
|28%||Race club betting & gambling
Entertainment & Cinema
Hotels, inns, guest houses, which have a room tariff of Rs.5000 and above per room per night
Revised GST Tax Rates List
The GST Council on June 11, 2017 has decided to lower the proposed rates of 66 goods and services. The GST tax rate for goods like pickles, instant food mixes, insulin, agarbatti has been revised in the meeting. The Council also decided to allow all the small traders, restaurants and manufacturers with a turnover of Rs. 75 Lakhs to opt for a composition scheme. This move comes as a big respite to the small business owners who will be able to opt for a composition scheme and hence pay taxes at 1-5 percent. The government expects to strengthen the small and medium enterprise through this step. Earlier the limit for the same was set at Rs. 50 Lakhs. Under this scheme, the small business owners have the provision to pay 1-5% GST rate on the annual sales they make without any tax credits.
There’s a good news for cinema lovers as the movie tickets priced Rs. 100 and below will be taxed at 18%. In case, the cost of the movie ticket is above 100, then it will be taxed at 28%.
|Product||Proposed GST Tax Rate on May 19||Revised GST Tax Rate on June 11|
|Instant Food Mix||18%||12%|
|Children's Colouring Book||18%||NIL (0%)|