The Goods and Services Council ended its 2-day meet in Srinagar after finalising tax rates for various sectors. The GST is expected to be rolled out from July 1. Out of the 1,211 items, the GST rate for all but six was decided on the first day.
On the GST tax rates, Nitasha Shankar, Sr. vice president and head of research, YES Securities India Ltd said, “As GST is one of the biggest tax reforms to be rolled out, it would go on to boost the positive sentiment for the markets. As such, sectors which could see a benefit due to the GST rates announced till now would include FMCG, utilities and other metal companies that use coal as an input, dairy, etc. Sectors that could see a negative impact include passenger vehicles especially in light of the cess announced for petrol and diesel vehicles. Post GST, we expect small to mid-segment cars to be impacted which in turn could translate into a gain for the two wheeler segment.”
We take a look at what are the rates applicable to various sectors:
#Motorcycles of more than 350 cc engine capacity will attract a total of 31 percent tax, including a cess of 3 percent, under the GST regime, same as the tax incidence on private aircraft and luxury yachts. Small cars of less than four-meter length and with a petrol engine of up to 1200 cc will attract a 1 percent cess on top of the peak rate of 28 percent.
#All cars, buses, trucks and motorcycles including mopeds will attract the peak Goods and Services Tax (GST) of 28 percent. Small diesel cars with an engine of less than 1500 cc will be charged a 3 per cent cess. Mid-sized cars, SUVs and luxury cars will all attract 15 per cent cess, same as that for buses and vans that can carry more than 10 persons. Hybrid cars of more than 1500 cc engine would also attract 15 per cent cess.
“Overall, FMCG companies will see a wider market opening up for them and will be positive for stocks like ITC, Britannia, Colgate and HUVR,” said Vaibhav Agrawal (Head of Research and ARQ), Angel Broking.
#Many important inputs for the food processing industry such as jaggery, cereals and milk have been exempted from GST altogether.
#Sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 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. Aerated drinks and lemonade to attract 12 per cent cess on top of the peak rate.
#Pan masala gutkha will be charged 204 per cent cess. On tobacco, the cess will vary from 71-204 percent. Also, scented zarda and filter khaini will attract 160 per cent cess, while for pan masala gutkha it would be 204 per cent. Branded gutkha will be slapped with a cess of 72 per cent.
#Filter and non-filter cigarettes not exceeding 65 mm will attract cess of 5 per cent plus Rs 1,591 per 1,000 sticks. Non-filter cigarettes exceeding 65 mm but not exceeding 70 mm will attract cess of 5 per cent plus Rs 2,876, while 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 1,000 sticks, whichever is higher, would be levied while smoking mixtures for pipes and cigarettes will attract a levy 290 per cent.
#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.
#Frozen meat will attract a GST of 12 per cent. 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.
#A clean energy cess will be levied on coal, lignite and peat production at the rate of Rs 400 per tonne. The GST on coal has been brought down to 5 percent from the current tax incidence of 11.69 percent, thereby making electricity generation cheaper.
#ACs and refrigerators will fall in the 28 per cent tax slab.
#Mobile phone manufacturing will fetch 12 per cent tax.
#Life-saving drugs have been kept at 5 per cent rate.
#Ayurvedic or homeopathy medicines will be taxed at 12 percent.
#Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from the GST.
#Restaurants with a turnover of Rs 50 lakh or below to face 5% tax under GST; non-AC restaurant at 12%. AC restaurants and those with a liquor licence to charge 18% GST; 5-star hotels to levy 28%; hotels with a tariff of Rs 1,000-2,500 to pay 12% rate.
#Telecom, financial services to attract GST of 18 per cent; 28% tax for race club, betting and cinema halls. 5% GST to be levied on cab aggregators like Ola and Uber. Healthcare, education to remain exempted from GST, services to be taxed at 5, 12, 18, 28%; transport services to be taxed at 5%.