Taxation on commodities such as packaged cement, medicaments, smart phones, and medical devices shall come down under the Goods and Services (GST) Tax as the government has reduced its rates on these items. As per the new rates, the packaged cement attracts central excise duty of 12.5 percent + Rs.125 PMT and standard VAT rate of 14.5 percent.
At these rates, the present total tax incidence works out to more than 29 percent. If we include tax incidence on account of CST, octroi, entry tax, etc., the present total tax incidence would work out to more than 31 percent. As against this, the proposed GST rate for cement is 28 percent.
There will be lesser tax burden in case of Medicaments, including Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systems also. Medicaments, in general, attract six percent central excise duty and five percent VAT.
Further, CST, octroi, entry tax, etc. are also applicable in general. At these rates, the present total tax incidence works out to more than 13 percent. As against this, the proposed GST rate on medicines, including ayurvedic medicines, is 12 percent.
Smart phone attracts two percent central excise duty [one percent excise duty + one percent NCCD]. VAT rates vary from State to State from five percent to 15 percent. Weighted average VAT rate on smart phones works out to about 12 percent. Thus, the present total tax incidence on smart phones works out to more than 13.5 percent. As against this, the proposed GST rate for smart phones is 12 percent.
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Similarly, medical devices, including surgical instruments, in general attract six percent central excise duty and five percent VAT. Along with CST, octroi, entry tax, etc., the present total tax incidence on them works out to more than 13 percent. As against this, the proposed rate under GST is 12 percent. Puja samagri including havan samagri will be under the Nil category.
However, exact formulation for the same is yet to be finalized.
Earlier, the GST Council approved 18 percent tax ad valorem on access to circus, theatre, Indian classical dance including folk dance and drama.
Further, the GST Council has approved an exemption up to a consideration for admission of Rs 250 per person. These services currently attract entertainment tax levied by the states.
Thus, entertainment services shall suffer a lower tax incidence under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits ( ITC) of GST paid in respect of inputs and input services.
Presently, such service providers are not eligible to avail of input credits in respect of Value Added Taxes ( VAT) paid on domestically-procured capital goods and inputs or of Special Additional Duty ( SAD) paid on imported capital goods and inputs. Thus, while GST is a value added tax, entertainment tax, presently levied by the states, is like a turnover tax.