GST Rate Structure has been finalized by the Goods and Services Tax Council on Thursday along with the approval of all the nine rules required for a successful roll out on 1st July 2017. GST Rate Structure has been one of the key steps from the Modi Government and it has caught the attention of market due to the implications on earnings of the companies.
The Modi Government has kept a large chunk of commodities under the 18% slab which has raised many questions regarding the future of manufacturing in India. However, Indian market being notorious due to its complex tax system, it becomes impossible for new businesses and startups to navigate through a host of direct and indirect taxes. Adding to their horror, is the constant changes to taxes such as Service Tax but from now on, things are set to change with the arrival of the new Goods and Service Tax and the GST Rate Structure.
GST is going to replace numerous taxes after its implementation, such as Central Excise Duty, Service Tax, Countervailing Duty, Special Countervailing Duty, Value Added Tax (VAT), Central Sales Tax (CST), Entertainment Tax, Entry Tax, Purchase Tax, Luxury Tax, Advertisement taxes and taxes applicable on lotteries among others.
It is being hailed as the biggest game changer for India’s economy since India’s independence as the GST Rate Structure presents India a unified regime and also aims at bringing black money back into India’s mainstream economy.
GST Rate Structure is divided into seven categories Zero percent 5 Percent 12 Percent 18 Percent 28 Percent Special category tax and Tax on Luxury Items. The exempted list has 229 items at the central level and 99 in the states. Out of the total 1,211 items, only 19% items will be taxed under the 28% slab, while 81% of items will be taxed at the rate of 18% or lower.
Reading a Government schedule is one of the most complexed things to do in this world and since consumers are keen to know about the rates applied to everyday items, we have made a list of all the commodities according to GST Rate Structure for easy interpretation.
From milk, butter, ghee to video game consoles, from artificial kidneys to refrigerators and motor vehicles, we’ve covered it all.
No Tax Or Zero Percent
Fresh milk, Fresh fruits, Cereals, Puffed rice, papad, bread, Aquatic/poultry/cattle feed, Salt, Human blood, Contraceptives, Condoms, Firewood, Printed books, Bangles (non-precious metals) and Agricultural implements
Five Percent
Branded paneer, Frozen vegetables, Coffee, tea, Branded cereals, Soybean, groundnut, sunflower seeds, Vegetable fats & oils Beet sugar, cane sugar Cocoa beans, shells, paste Bakery mixes, doughs, pizza bread, vermicelli, rusks, Sweetmeats
All ores and concentrates, Coal, Lignite, Peat, Tar, Kerosene PDS, LPG for domestic consumption by IOC, HPCL, BPCL, Nuclear fuel, Nuclear grade sodium, Heavy water and other nuclear fuels, Compressed air.
Animal or human blood vaccines, Diagnostic kits for detection of all types of hepatitis, Desferrioxamine injection or deferiprone, Cyclosporin, Medicaments (including veterinary medicaments) used in bio-chemic systems and not bearing a brand name, Oral rehydration salts Drugs or medicines including their salts and esters and diagnostic test kits
Handmade safety matches, Newsprint, Sand lime bricks, fly ash bricks
Steel utensils, Geometry boxes, Iron/ steel/ ferrous alloy (kerosene burners and stoves), Iron/ steel/ ferrous alloy (table or kitchen or other household articles), Copper utensils, Hand pumps, Solar water heater, Renewable energy devices
Boats, fishing vehicles, Coronary stents, Artificial kidneys, Broomsticks
Twelve Percent
Frozen meat, Butter, ghee, cheese, Dry fruits, Meats and fish preparations, Fruits, and vegetable juices, Ready to eat nankeen/bhajia, Milk beverages
Bio-gas, Medicinal grade hydrogen peroxide, Anaesthetics, Potassium iodate, Iodine Steam Glands and other organs for organo-therapeutic uses
Homoeopathic, Ayurvedic, Unani, Siddha or Biochemical systems medicaments, put up for retail sale, Sterile suture materials, Sterile catgut, Sterile suture material, Sterile dental yarns, Sterile tissue adhesives for surgical wound closure, Dental hemostatics, Fertilisers.
Fountain pen ink, ball pen ink, Tooth powder, Agarbatti, Candles, Silicon wafers, Natural cork, Wood pulp, Children’s drawing books, Calendars Ceramic tableware, kitchenware, toilet articles, Lenses used in spectacles, Barbed wire of iron and steel Screw, bolts, nuts, Sewing/knitting needles
LPG stoves, Aluminium utensils, Pencil sharpeners, knives, Power driven water pumps, Cellphones, Tractors, Electric vehicles, Bicycles, Spectacle lens, LED lights, Sports goods, Artworks and Antiques.
Eighteen Percent
Condensed milk, Refined sugar, Infant use preparations, cornflakes, pasta, waffles, pastries and cakes, Preserved vegetables, Jams, jellies, Tea concentrates, sauces, soups, ice cream, instant food mixes, sherbet, Mineral/aerated water (without sugar).
LPG for domestic supply by IOC, HPCL, BPCL, Petroleum jelly, Paraffin wax, Petroleum coke, Petroleum bitumen, Nicotine polarizes gum.
Essential oils, Hair oil, Dentifrices -toothpaste, Soap, Whey proteins & fitness supplements, Gelatin, Propellant powder, Insecticides, fungicides, disinfectants.
Plastic products, Hot water bottles, Toilet paper, Notebooks
Helmets, Hats and other headgears, Bird feathers, Copper bars, rods, wires, Copper screws, nuts, bolts, Nickel bars, rods, wires, Nickel screw, nuts, bolts, Nickel tubes, pipes, netting, Aluminium ingots, rods, wires, Lead plates, sheets, strips, Zinc goods, Tin bars, rods, Padlocks, locks, Braille typewriters and Cellphones.
Twenty-Eight Percent
Cocoa butter, fats, oils, powder, chocolates Instant, aroma coffee Coffee concentrates, custard powder Pan masala Protein concentrates, sugar syrups, Aerated water (with sugar)
Paints and varnishes, Artists’, students’ or signboard colors, Putty, wall fillings, Perfumes, Beauty or make-up preparations, Skincare preparations, including sunscreen, Manicure or pedicure preparations.
Shampoos, hair cream, hair dyes, Dental floss, Toothpaste, Deodorants, Detergent, Aftershave, Shaving cream, Liquid soap, Plastic products, Rubber tyres, Leather bags, Fur & artificial fur apparel, Particleboard, Plywood, Wallpaper, Headbands, felt hats Wigs, false beards, eyelashes, Artificial flowers.
Marble, Granite, Plaster, Mica, Calcareous stone, Ceramic tiles, Tempered glass, Stoves (other than kerosene stove and LPG stoves), Barbecues, braziers, gas-rings, Electric hot plates, Electrical heaters, Aluminium foil, Razors, Manicure, pedicure sets
Air Conditioners, Refrigerators, Storage water heaters, Dishwashing machines, Printer, photocopier, fax machines, Electric shavers, Motorcars, Motorcycles, Yachts, Wristwatches, Pianos, Revolvers, Furniture, Video game consoles and Exercise equipment.
Following are the goods on which Compensation Cess will be applicable according to the GST Rate Structure
- Pan masala: 60 %
- Aerated water: 12 %
- Cigarettes: 5 % + Rs 1,591 – 4,970/1,000 sticks
- Small cars (less than 4 meters, petrol): 1 %
- Small cars (less than 4 meters, diesel): 3 %
- Mid to large cars: 15 %
- Sports Utility Vehicles (SUVs): 15 %
- Hybrid motor vehicles: 15 %
- Motorcycles: 3 %
- Aircraft (personal use): 3 %
- Yachts: 3 %
As for its impact on the Indian economy. The GST Rate Structure is expected to trigger inflation in the short term. Services such as restaurants and movies are bound to increase prices and further, many pundits feel the not including liquor and petroleum under the GST Rate Structure might cause problems in the future as these are major revenue sources for the Indian government.
The heart of the matter is, a new law being perfect is rarely seen in India and while the Goods and Services Tax offers a slew of tax rate deductions on several items, luxury items and the proposed cess to be charged on them, seems to reflect a null and void kind of situation for the middle class. However, you should expect some changes in the GST Rate Structure in the coming future.
Stay tuned for more updates and in-depth analysis of the new GST rate structure.