1. GST tax rates declared; here’s how your household budget will be impacted

GST tax rates declared; here’s how your household budget will be impacted

GST tax structure: As details emerge of the 4-tier tax structure under GST, it is yet unclear what items in your household budget are likely to cost more, and which will be cheaper.

By: | Updated: November 3, 2016 6:54 PM
According to Finance Minister Arun Jaitley, items that are used by the aam aadmi, that is which qualify for mass consumption, will be taxed at 5%.

GST tax structure: As details emerge of the 4-tier tax structure under GST, it is yet unclear what items in your household budget are likely to cost more, and which will be cheaper. The GST Council has decided on four main tax rates, 5%, 12%, 18% and 28%. The highest tax rate is more than what the industry was anticipating. Dabur CEO Sunil Duggal told CNBC TV-18 that the 28% tax rate is a surprise. “We expected a rate of 25-26%. It is unclear whether this rate is applicable on food & ayurvedic products. We need more clarity on items in each slab,” he said.

According to Finance Minister Arun Jaitley, items that are used by the aam aadmi, that is which qualify for mass consumption, will be taxed at 5%. Around 50% of the items that form part of the consumer price index basket (such as daily food consumption items) will not be taxed at all under GST. The tax rate of gold is yet to be decided, the Finance Minister said. Jaitley has also said that several items will be transferred to the 18% GST rate category from 28%.

The highest tax slab will be applicable to items which are currently taxed at 30-31% (excise duty + VAT). Luxury cars, tobacco and aerated drinks would also be levied with an additional cess on top of the highest tax rate. Jaitley has said that the additional revenue from the highest tax slab will be used to keep essential use items at 5% and to help transfer common items to 18%

While ELP expects to see lower tax on most items, Ernst Young India is unsure of which goods will fall under which bracket. “I think that aerated drinks will likely get costlier under the 28% tax rate bracket. It is yet unclear whether FMCG products will qualify for the 28% tax rate or not. If they do, then shampoos and cosmetics will be more expensive under GST. There was also some talk of including air-conditioners in the 28% bracket. I don’t think ACs are luxuries any more. But, the government may choose to tax the high-end ACs at 28%, though it is difficult to classify,” Bipin Sapra, Tax Partner at EY India told FE Online. Jaitley has also said that several items will be transferred to the 18% GST rate category from 28%.

  1. H
    Hjjjvnjjk
    Jun 30, 2017 at 2:36 pm
    Hjjjgvbhj
    Reply
  2. T
    Tara Datt Papnai
    Apr 24, 2017 at 9:52 am
    Witch tax of Stock Transfer
    Reply
  3. S
    shwetha s
    Jan 27, 2017 at 8:54 am
    rate of tax for specific goods and service
    Reply
  4. A
    Aadhar
    Nov 3, 2016 at 1:11 pm
    Why Liquor is exempted from "Sin- Tax"? This sounds more like a "Witch-hunt". If Tobacco and Aerated drinks, even ACs are bad, why Liquor is given holy cow treatment?
    Reply
  5. B
    Bhanu
    Nov 3, 2016 at 1:21 pm
    Liquor/Petroleum doesn't come under GST.. it will be controlled by state governments. As states will get most of it finance from these two products they didn't agree to include these two under GST.
    Reply
  6. K
    K.Mundanad
    Nov 4, 2016 at 12:58 am
    Apropos of the statement "The GST Council has decided on four main tax rates, 5%, 12%, 18% and 28%.", actually there are six rates, including zero rate and a highest rate (yet to be finalized) on Luxury cars, tobacco and aerated drinks.
    Reply
  7. Load More Comments

Go to Top