The Goods and Services Tax Council on Thursday approved all nine rules required to roll out the new tax regime from July 1. It also finalised the rate of taxation on 80%-90% of items, those that will be exempted from the GST and the 55 items that will invite cess.
The Council, chaired by Finance Minister Arun Jaitley, comprises state finance ministers. The two-day meeting is being conducted at the Sher-i-Kashmir International Convention Centre in Srinagar amid very high security. Around 3,000 personnel, including the state police, BSF and CRPF, have been deployed for the high-profile meeting.
On Day One of the meeting, the Council had clubbed commodities under seven categories of taxes – zero per cent, 5%, 12%, 18%, 28%, special category and luxury items category. The exempted list has 229 items at the central level and 99 in the states. The Council decided to keep 81% of a total of 1,211 items at the modal tax rate of 18% or below. “Only 19% items will be in the 28% tax slab, while 81% of items will be taxed at 18% or lower,” Revenue Secretary Hasmukh Adhia told The Indian Express.
Travel on the Metro and suburban or local trains will be exempt from GST, as will Hajj and other pilgrimages. Economy-class air travel will be taxed at 5% while business-class tickets will be taxed at 12%, Revenue Secretary Hasmukh Adhia said. Passengers using the service of cab aggregators like Ola and Uber will have to shell out 5% in tax. While telecom and financial services will attract a GST of 18%, those frequenting race clubs, bookies’ den and cinema halls will have to pay 28% as tax.
On Friday, the Council is likely to decide the tax rates of items like beedis, biscuits, footwear, gold, textiles, handloom handicraft and power-driven agricultural equipment. “There are six categories [of items] that need more discussion,” said Union Finance Minister Arun Jaitley, according to The Hindu. “These will be taken up tomorrow [Friday].”
- Staples like pulses and rice, milk, cereals and other foodgrain will get cheaper as these have been added to the exempt list, meaning there will be no GST on these commodities.
- Items like edible oil, sugar, tea, coffee will have a 5% tax levied on them.
- Prices of consumer durables will also drop. Such items have been clubbed under the 28% taxation slab. Earlier, items like air conditioners used to invite 32% or more tax.
- Items like toothpaste, soaps and hair oil will also get cheaper once the tax regime is rolled out. These will now attract 18% GST, almost a 10% slash from the current rate of taxation.
- But, cars and motocycles are likely to get more expensive. Small petrol cars with an engine capacity of less than 1200 cc will attract 1% cess. Those with a diesel engine capacity of less than 1500 cc will attract 3% cess. Meanwhile, big cars with an engine capacity more than 1500 cc, and SUVs that are more than 4 m long and engine capacity of over 1500 cc, will attract a cess of 15%. Similarly, high-end motorcycles fall under 3% cess and 28% GST rate.
- Cigarettes, pan masala and gutkha will all get more expensive.
- Capital goods, a basic requirement in the manufacturing sector, will be taxed at a rate of 28%.
- There is also a huge slash for coal prices. Currently, it was taxed at a rate of 11.7%. After GST, the item will attract a GST rate of 5%. This will bring down the cost of energy generation.
- While the Centre wants to reduce the number of items in the tax-exempted list, state finance ministers want this category to be expanded. One of the reasons is that the states no longer have to meet tax collection targets.
- Healthcare and education have been kept out of the purview of GST.
- AC train fares and road transport will be taxed at 5%.
- Among the 120 services being taxed under the GST regime, a vast majority will fall in the 18% tax slab. However, air travel services, restaurant services and renting of hotels could get taxed at 12%.
- Transport of goods by road (trucks) and rail and financial leasing including hire purchase could fall under the lowest GST rate of 5%.
- Ac eateries with liquor licence will charge 18% GST; five-star hotels will levy 28% and hotels with tariffs between Rs 1,000 to Rs 2,500 will tax 12%.
Read the full list of tax rates here.