1. GST on footwear up to Rs 500, apparels sub-Rs 1,000 at 5%; biscuits and beedi leaves in same slab at 18%

GST on footwear up to Rs 500, apparels sub-Rs 1,000 at 5%; biscuits and beedi leaves in same slab at 18%

The GST Council has fixed the tax rate on footwear worth up to Rs 500 at the lowest tax slab of 5% under the new GST regime. Beedi leaves have been taxed at 18%, while beedis itself have been taxed at 28% without cess, lower than the rate imposed on cigarettes.

By: | Updated: June 3, 2017 10:09 PM
GST council has levied tax on textiles such as yarn and fabric cotton at the lower slab of 5%, but has kept ready-made garments in the upper 12% bracket. (Image: Reuters)

The GST Council has fixed the tax rate on footwear worth up to Rs 500 at the lowest tax slab of 5% under the new GST regime, Finance Minister Arun Jaitley said on Saturday. The GST tax rate on footwear costing more than Rs 500 is fixed at the higher 18%, despite some prevailing criticism on differential tax rate on the items of the same category. “At present, footwear less than Rs 500 is taxed at 9.5% — all taxes put together,” Arun Jaitley said.

The different rates in this case seem to reflect the administration’s thinking on shielding the poor from a rise in cost of an essential item. Notably, Finance Minister Arun Jaitley had said earlier this year that a hawai chappal and a BMW car should not be taxed at the same rate, while justifying the slab rate structure for the proposed GST.

The tax rate on beedi leaves has been kept at the second highest tax slab of 18%, while the beedis itself will be taxed at the highest slab of 28%, albeit without any cess, Arun Jaitley said. This compares with the highest tax slab of 28% and a sin goods cess of up to 290% levied on cigarettes. This could weigh on the tobacco industry, which has lobbied for narrowing the gap between tax incidence on cigarettes and beedis.

Further, the council has also levied tax on textiles, such as yarn and fabric cotton at the lower slab of 5%, and has also kept the apparels up to Rs 1,000 per piece at 5%. The council has put other readymade garments in the upper 12% bracket, Arun Jaitley said. However, man-made yarn has been taxed at a higher slab of 18%.

To the surprise of many, the tax rate on all biscuits has been decided to be kept at 18%, irrespective of the price. Various media reports had suggested that the government would impose a lower tax on the biscuits cheaper than Rs 100 per kilogram. “The tax on lower priced biscuits at present is at 20.6% on weighted average basis…,” Arun Jaitley said, adding that the nearest tax rate has been chosen.

The GST Council met in New Delhi today to fix the rate of taxes on six remaining items from the list of 1,211 items on which it has already fixed the rates. Earlier last month, the GST Council, tasked with tasked with framing rules for implementation of GST, finalised the rate of tax on over 1,200 items and most of the services, while deferring decision on six items including gold to today’s meeting.

The council has proposed four tax slabs at 5%, 12%, 18% and 28% under GST, while exempting essential or daily consumption items and services from tax levy, such as fresh meat, fish, chicken, eggs, milk, curd, natural honey, fresh fruits, vegetables, flour and bread, and healthcare and education services. Other than this, it levied cess over and above the 28% tax on certain luxury goods and sin goods. The GST Council kept 81% of the items in the first three tax brackets, ie, up to 18%. The 12% and 18% tax bracket together account for two-thirds of all items.

GST seeks to unify the entire country into a single market with only one value-added tax levy on all the goods and services across states at the point of consumption, subsuming up to 16 different taxes and levies that are imposed at present. This is expected to make the movement goods across the state borders smoother, faster and easier, though some experts have raised concerns over the complications that could arise out of a multiple tax-slab structure.

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Tags: GST
  1. j
    Jul 15, 2017 at 12:37 pm
    1. V
      Vijay Luthra
      Jul 3, 2017 at 2:16 pm
      We are manufacturing bathroom slippers for hotels and hospitals- With rubber/plastic soles and upper of knitted fabric 0r jute cloth below ₹ 500/-. Would you please intimate HSN code for that
      1. B
        Jun 22, 2017 at 1:31 pm
        Dear Sir, We have doing garments business for readymades for mens, women's Kids What is the GST rate of Tax HSN code.
        1. P
          Pawan Kaushik
          Jun 3, 2017 at 8:24 pm
          Govt. wish to do "Unease of Doing business" and "Tax Terrorism". They are following Indira hi policy and will make India a mess and then Modi will become pro poor give a slogan Garibi Hatao. They want to finish Middle Class. If Garment at 12 why not a Bag at 12 or 18 . Why it is at 28 because bag s ching is done by poor and they want to finish them and Samsonite and VIP who imports luggage will continue to imports. Shri Jaitely Ji know Slipper of Rs.500/- below at 5 and Shoes at 18 then why School Bag which is necessity for Children at 28 because he is Shoes Hub Delhi and he does not look beyond Delhi. Only politician discuss all this, why they don't involve middle cl entrepreneur who have real experience and know the basic problems.
          1. T
            Jun 3, 2017 at 7:44 pm
            what does apparels upto 1000 rs means mrp or sellimg price.. what if product doesnt hav a MRP
            1. G
              Gautam sachdeva
              Jun 3, 2017 at 7:43 pm
              What will be the tax rate on uns ched cloth fabric.
              1. G
                Jun 3, 2017 at 7:20 pm
                Now there will be classification wars between essee and Govt. If essee says natural yarn and Govt says man-made yarn and both are at different rates, endless litigations can be forecasted
                1. R
                  Rakesh Adnani
                  Jun 3, 2017 at 6:57 pm
                  Whether footwear costing less than ₹ 500 means the MRP or the sel price by manufacturer or distributor or retailer. Will the price be the transaction value or the MRP ?
                  1. G
                    Jun 3, 2017 at 7:18 pm
                    based on MRP
                    1. A
                      Jun 3, 2017 at 7:43 pm
                      Are you sure that it is Bassed on MRP, not Manufacturer Costing?
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