The goods and services tax (GST) Council backed the 1 July deadline for rolling out the unified indirect tax that will help create a single national market and ensured that items of mass consumption bear the least tax burden. The council fixed tax rates on 1211 items, most of which will likely become cheaper as the new rates will be lower than the current effective levies.
A report says that the council has finalised tax rates on 80-90 percent of goods and services under the four-slab structure with essential items of daily use being kept in the lowest bracket of five per cent. The Council, headed by Union Finance Minister Arun Jaitley and comprising representatives of all states, in the opening session of the two-day meeting also approved rules for the Goods and Services Tax (GST).
Official sources said that 80-90 percent of the items have been fitted in 5, 12, 18 or 28 percent brackets. The fitments, they said, have been done in a way that there is no increase in tax incidence. So rates close to the present incidence of excise duty plus VAT or service tax has been considered to be the rate under the GST. The complete details of the rates decided are likely to be available once the meeting gets over tomorrow. Jaitley was of the view that there should be minimum exemptions under the GST and should be provided for only if it is essential, a government official said.
Get ready to pay a 204 per cent cess on pan masala gutkha while consumers of aerated water will pay just 12 per cent cess and people buying large cars have to cough up 15 per cent cess. The Centre and states have agreed to impose a cess on demerit and luxury goods under the Goods and Services Tax regime, over and above the peak tax rate of 28 percent. While small petrol cars with an engine less than 1200 cc will attract one per cent cess, that with a diesel engine of less than 1500 cc will attract 3 per cent cess, according to the list of items for cess posted on CBEC website late night.
Large cars with an 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 the engine of more than 350 cc will attract three per cent cess and an equal amount of levy will be applying to aircraft for personal use and yachts. The GST Council at its 14th meeting finalised the seven set of rules for the new regime and also decided on tax rates and cess on goods.
With regard to pan masala, the cess will be 60 per cent, while in tobacco the levy will vary from 71-204 percent. 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 five per cent plus Rs 1591 per 1000 sticks. Non-filter cigarettes exceeding 65 mm but not exceeding 70 mm will attract cess of five per cent plus Rs 2876, that for filter cigarettes the levy is five per cent plus Rs 2126 per thousand sticks. For cigars, a hefty levy of 21 per cent or Rs 4170 per 1000 sticks, whichever is higher, would be levied. Branded gutkha will be slapped with a cess of 72 percent while smoking mixtures for pipes and cigarettes will attract a levy 290 per cent.
While 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 percent. Pastries and cakes, pasta, ice cream and soups, instant food mixes, betel nut, vinegar and sharbat will attract an 18 per cent tax, while the highest tax of 28 per cent will be levied on chewing gum, chocolates, custard powder and waffles containing chocolate.
Foodgrains and common-use products like hair oil, soaps and toothpaste as also electricity will cost less from 1 July when the GST is scheduled to be rolled out. Cars will attract the top rate as also a cess in the range of 1 to 15 percent on top of it.
Small cars will be charged one per cent cess on top of 28 percent 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 percent 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.
While 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 items list put on CBEC website late in the night. The Goods and Services Tax (GST) on coal has been brought down to five per cent from the current tax incidence of 11.69 percent, 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 percent tax slab while life-saving drugs have been kept at five per cent rate. All capital goods and all industrial intermediaries would attract 18 per cent tax instead of 28 percent.
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 percent, almost the same as current incidence.
AROUND THE WORLD
France was the first country to implement the GST in 1954. Since then, Germany, Italy, the UK, South Korea, Japan, Canada and Australia have been among the over a dozen nations which have implemented the GST. China implemented GST in 1994 while Russia did it in 1991. Saudi Arabia plans to do it in 2018.
Photo courtesy: Times of India