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
Various Tax Slabs of GST
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.
Comparison of the current tax rates with the proposed GST rate
|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%|