GST rate: New tax brackets bring good news; most food items, milk, electricity to be cheaper from July 1

GST is scheduled to be rolled-out as the all-powerful GST Council on Thursday finalised tax rates for the bulk of the items. As per the list of uploaded on CBEC website late on Thursday night, the Council has fitted most items in 5, 12, 18 or 28 per cent tax brackets. While some items have been exempted from any tax, some items like cars and pan masala will attract top rate and also a cess. 

The GST council, headed by headed by Union Finance Minister Arun Jaitley and comprising state representatives, finalised the GST rates for all but six items. The rates for those items, including gold are likely to be decided on day 2 of the meeting on Friday. 

Out of the 1,211 items, the GST rate for all but six was decided on the first day, Jaitley told reporters in Srinagar on Thursday. 

“Rates have been finalised for the rest,” he said, adding GST for packaged food items is to be finalised later.

“(With) the standard rate items of 12.5 per cent and 15 per cent, plus the cascading effect of local taxes, the tax rate was going up to 30-31 per cent. These 30-31 per cent taxes... have all been brought down to 28 per cent.

“Of these, some are items to be used by common man soap, oil—that has been brought down to 18 per cent. So there will be a substantial reduction as far as those items are concerned. We have kept one criteria in mind that the overall impact is not inflation, in fact it brings down the costs,” Jaitley added.

Revenue Secretary Hasmukh Adhia said 7 per cent of the items fall under the exempt list while 14 per cent have been put in the lowest tax bracket of 5 per cent. Another 17 per cent items are in 12 per cent tax bracket, 43 per cent in 18 per cent tax slab and only 19 per cent of goods fall in the top tax bracket of 28 per cent.

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As many as 81 per cent of the items will attract 18 per cent or less GST.

On gold, states demanded a 4 per cent tax even though the rate is not among the 5, 12, 18 and 28 per cent approved bands.

Jaitley said there will be no inflationary impact as most of the rates which are at 31 per cent have been brought down to 28 per cent.

Jaitley said the key feature of rate decision has been that “tax rate under GST will not go up for any of the commodities. There is no increase. On many commodities, there is a reduction particularly because the cascading effect of tax is gone.”

“Of several commodities, we have consciously brought down the tax. In the overall basket there would be a reduction, but we are banking on the hope that because of a more efficient system, evasion would be checked and tax buoyancy would go up.  That despite reduction the revenue neutrality and tax buoyancy thereafter would be maintained,” he added.

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Here is the list of what will cost how much after the implementation of GST 

#Foodgrains and common-use products like hair oil, soaps and toothpaste as also electricity will cost less from July 1.

#Small cars will be charged 1 per cent cess on top of 28 per cent tax, mid-sized and luxury cars will attract cess of 15 per cent on top of the peak rate.

#Aerated drinks too have been put in the 28 per cent bracket along with a cess of 12 per cent, but the rates for bidis along with gold, footwear, bidi, biscuits and agriculture equipment would be decided later.

#Meat, fresh vegetables, honey, jaggery, prasadam, kumkum, bindi, pappad and contraceptives have been exempt from GST levy.

#Items like pizza bread, sevaiya, condensed milk, frozen vegetables will attract 5 per cent levy, as per the list.

#The Goods and Services Tax (GST) on coal has been brought down to 5 per cent from the current tax incidence of 11.69 per cent, thereby making electricity generation cheaper.

#Common use products like hair oil, soaps and toothpaste will be charged with a single national sales tax or GST of 18 per cent instead of present 22-24 per cent tax incidence through a combination of central and state government levies.

#ACs and refrigerators will fall in the 28 per cent tax slab #Life-saving drugs have been kept at 5 per cent rate.

#All capital goods and all industrial intermediaries would attract 18 per cent tax instead of 28 per cent.

#Milk and curd will continue to be exempt from taxation when the GST replaced current indirect taxes. ‘Mithai’ or sweets will attract 5 per cent levy.

#Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 per cent, almost the same as current incidence.

#Frozen meat will attract a GST of 12 per cent.

#Ayurvedic or homeopathy medicines, agarbatti, umbrella, electric vehicles and mobile phone manufacturing will be taxed at 12 per cent.

#Pastries and cakes, pasta, ice cream and soups, instant food mixes, betel nut, vinegar and sharbat will attract a 18 per cent tax.

#The highest tax of 28 per cent will be levied on chewing gum, chocolates, custard powder and waffles containing chocolate.

#While small petrol cars with engine less than 1200 cc will attract 1 per cent cess, that with a diesel engine of less than 1500 cc will attract 3 per cent cess.

#Large cars with engine greater than 1500 cc and SUVs with length more than 4m and engine greater than 1500 cc will attract cess of 15 per cent.

#Motorcycles with engine of more than 350 cc will attract 3 per cent cess and an equal amount of levy will be applying to aircrafts for personal use and yachts.

#With regard to pan masala the cess will be 60 per cent, while in tobacco the levy will vary from 71-204 per cent.

#Also scented Zarda and filter Khaini will attract 160 per cent cess, for pan masala gutkha it would be 204 per cent.

#The cess would be levied over and above the peak GST rate of 28 per cent.

#Filter and non-filter cigarettes not exceeding 65 mm will attract cess of 5 per cent plus Rs 1,591 per 1000 sticks.

#Non-filter cigarettes exceeding 65 mm but not exceeding 70 mm will attract cess of 5 per cent plus Rs 2,876, that for filter cigarettes the levy is 5 per cent plus Rs 2,126 per thousand sticks.

#For cigars, a hefty levy of 21 per cent or Rs 4,170 per 1000 sticks, whichever is higher, would be levied.

#Branded gutkha will be slapped with a cess of 72 per cent, while smoking mixtures for pipes and cigarettes will attract a levy 290 per cent.

#Besides, a clean energy cess will be levied on coal, lignite and peat production at the rate of Rs 400 per tonne.

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(With Inputs from PTI)