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Home > Around the Globe > GST: No tax on cereals, milk; cars may cost more
Around the Globe
GST: No tax on cereals, milk; cars may cost more
By  
FC BUREAU   , Published : Jun 5, 2017, 11:50 am IST | Updated : Jun 5, 2017, 11:50 am IST

Of 1,211 items, 81% to be taxed below 18%

The common man can rejoice. The proposed goods and services tax (GST) has kept cereals and milk outside the tax net, while keeping daily use products sugar, tea, coffee (except for instant coffee) and edible oil at the lowest rate of 5 per cent, almost the same as current incidence.
Those looking to buy small cars would be a little disappointed as the GST Council has decided to put small cars under the highest tax slab of 28 per cent. In addition, they will also attract 1 per cent cess. The cess rates for mid-sized and luxury cars have been kept at 3 per cent and 15 per cent respectively.
The Centre has already cleared all legislations related to introduction of GST from July 1. States are now in the process of clearing the indirect tax legislation.
The GST Council, in its two-day meeting that started in Srinagar on Thursday, decided tax rates for all 1,211 items but left out six categories. Of these, 81 per cent items are to be taxed below 18 per cent and only 19 per cent products will be subject to the highest rate of 28 per cent rate.
As much as 17 per cent items are in 12 per cent tax bracket, 43 per cent in 18 per cent, 14 per cent under 5 per cent and 7 per cent are exempted.
The tax rate on coal has been brought down to 5 per cent from 11.69 per cent at present, which would make electricity cheaper.
The tax rates for six categories of products — gold, bidi and cigarette, bio-diesel, footwear, textiles and agricultural implements — will be discussed on Friday. Rates for branded cereals and packaged foods including fruit juices will also be discussed in Friday’s meet.
Friday’s meeting will also decide on the rate of tax for services. Finance minister Arun Jaitley said there will be no inflationary impact as most rates have been brought down to 28 per cent from 31 per cent. “The standard rate items of 12.5 per cent and 15 per cent, plus the cascading effect of local taxes, the tax rate was going up to 30-31 per cent. These 30-31 per cent taxes have all been brought down to 28 per cent," the finance minister said.
Rajeev Dimri, leader, indirect tax, BMR & Associates LLP, said, “In the first day of 14th meeting, GST Council has set the ball rolling for the GST rollout targeted for July 1. The focus of the Council was on the fitment of commodities in the pre-announced slab rates and finalisation of GST rules. With the announcements spanning across both the days of its meeting, India Inc will have sufficient information to realign its reporting systems and existing processes in line with GST requirements.”
“While these are important factors and industry would look up to knowing the category of rates their products qualify under; one would also expect some clarity in terms of the actual roll-out date, as clearly many states are yet to clear their state acts and subsequently the final rules,” said Suresh Nandlal Rohira, Partner, Grant Thornton.
“There are several areas within the GST law that are uncertain and guidance is anticipated and there is hope that this would be clarified during the meeting,” said Saloni Roy, senior director, Deloitte Haskins & Sells LLP.
Pratik Jain, partner and leader, indirect tax, PwC , said, “Categorisation of several consumer products like soaps, tooth paste and hair oil under 18 per cent is good news and should see price drop for consumers. Similarly, several food items such as edible oil, tea, coffee sugar etc have been kept at 5 per cent, with exemption for milk and food grains, which would also bring cheers for industry.
The complete details of the rates decided are likely to be available once the meeting concludes on Friday. Various state finance ministers separately sought exemption on items like silk yarn, puja material and handicraft items. Jaitley was of the view that there should be minimum exemptions under the GST and it should be provided for only if essential, a government official said.
Before the start of the meeting, Kerala finance minister Thomas Isaac made a case for 5 per cent tax on gold under the GST regime instead of 1 per cent being demanded by some quarters as he felt that the precious metal is not an essential commodity.
Yogi Adityanath-led Uttar Pradesh sought zero levy on ‘puja samagri’ instead of the proposed 18 per cent. A few others are keen on only two rates for service tax -- 12 per cent and 18 per cent. end-of
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