GST Rates

GST Council comes out with the tax rates

The two-day meeting of the GST council held on the 18th and 19th of May in Srinagar was successful in fixing the rates of 1211 items. Care has been taken to exempt the basic food items from tax. The majority of the items are under the 18 per cent tax bracket including metals (not ores). Engines and cars are in the highest bracket of 28 per cent with a fifteen per cent cess in addition, on the luxury cars. The two wheelers are at 28 per cent and cement which is taxed at 24-25 per cent will also be in the highest bracket. ACs, fans, refrigerators and even tiles, sanitary-ware and ceramics have also been pushed to the 28 per cent slab.

  1. Chapter wise rate wise GST Schedule decided in the GST Council Meeting held on 18.05.2017
  2. Schedule of GST rates for services
  3. List of Services under reverse charge
  4. Classification Scheme for Services under GST
  5. GST Compensation Cess rates decided in the GST Council Meeting held on 18.05.2017

Relief for the e-commerce players: The announcement of the applicable rates of GST on goods and services had some good news for the e-commerce players. The Tax collected at source (TCS) will be deducted at the rate of 1 per cent from the payments to the sellers. The deduction has been made mandatory for the sellers while the consumers have been spared. This move will definitely bring in procedural hassles for e-commerce players but it is a move in the right direction as it will bring more transparency, till the time the tax collection system gets streamlined. The best part is that it takes care of the unfounded worries of the e-commerce players on the inter-state delivery of goods and also subsumes the entry tax which was being levied by some states on e-commerce shipments.

Bonanza for some sectors: As a big relief to lakhs of the Indian population, the GST council has exempted two important sectors of healthcare and education from tax. The restaurants have also got a good deal with just 5 per cent on small restaurants and 12 per cent on non-AC restaurants. There will be a levy of 18 per cent on the restaurants which have a liquor license. The cinema houses, betting and gambling clubs will be taxed at the peak rate of 28 per cent. The telecom and financial services will be in the 18 per cent bracket. Good news is that the service tax will subsume the entertainment tax.

Items for which rates are yet to be decided: A few commodities are still left out for which the GST rates will be decided in the next meeting which is scheduled to be held on 3rd of June.  The pending list includes Biri wrapper leaves, biscuits, textiles, footwear, precious metals and stones and power driven machinery used in agriculture, forestry and poultry keeping etc. The rates are also to be decided for harvesting and threshing machinery, cleaning-sorting and grading machinery and machines used in the milling industry. Another important item that will be discussed in the next GST council is the rate for taxation on gold.

It is expected that the GST rates decided in this meeting will have minimal impact on the inflation. In most of the cases, the GST rates are in line with the current tax rates and as expected based on the briefings in the previous government meetings. The anti-profiteering clause will prevent the companies from holding on to the benefit of the lower GST while those taxed at higher rates are likely to pass it on to the consumers. The effect is thus going to be neutralised.

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