The GST Council, chaired by Finance Minister Arun Jaitley and comprising state counterparts, today decided to tax packaged and branded food items at 5 per cent, tendu leaves at 18 per cent and bidi at the highest rate of 28 per cent. Unlike cigarettes, there will be no cess on bidi.
While biscuits will be taxed at a flat rate of 18 per cent, footwear costing up to Rs 500 will be levied a 5 per cent GST and for those above this would be taxed at 18 per cent.
In the textiles category, silk and jute fibre have been exempted, while cotton and natural fibre and all kinds of yarns will be levied a 5 per cent GST. Man-made fibre and yarn will, however, attract a 18 per cent tax rate.
All categories of fabric will attract a 5 per cent rate. Man-made apparel up to Rs 1,000 will attract a 5 per cent tax, lower than the existing 7 per cent. Those costing above Rs 1,000, will continue to attract 12 per cent.
“Both in the case of footwear and textiles, a major concession has been given,” Finance Minister Arun Jaitley said, adding the Council will meet one more time on June 11 to review the preparedness before the July 1 rollout.
Currently, biscuits costing less than Rs 100/kg attract an average tax of 20.6 per cent, while those above this price attract 23.11 per cent. “Both have been fitted in the nearest tax slab of 18 per cent,” Jaitley said.
Footwear costing up to Rs 500 currently attracts 9.5 per cent tax, and in GST it would be taxed at 5 per cent. Rest are taxed between 23.1-29.58 per cent, which in GST regime, would be levied 18 per cent tax.
Gold will become slightly costlier as the current incidence is 2 per cent and after “extensive debate” the Council proposed to tax gold and gold jewellery at 3 per cent. Also, input tax credit can be claimed for gold jewellery manufacture.
Jaitley said while some states wanted a 2 per cent tax rate, others were in favour of a 5 per cent tax on gold and hence, the Council decided on a “vertical division”.
Solar panel equipment will be taxed at 5 per cent, he said, adding lottery tax is yet to be decided.
When asked about West Bengal Finance Minister demanding a delay in GST rollout, Jaitley said “Others did not express this view” and exuded confidence that the state too would roll out GST from July 1.
“We are quite confident of being able to stick to the target date (of July 1),” he said.
West Bengal Finance Minister Amit Mitra said the rollout of the Goods and Services Tax from July 1 will have “serious problems” and there is no harm in delaying its implementation by a month.
Kerala Finance Minister Thomas Isaac, however, said “Everybody has agreed for July 1 rollout”.
The Council also agreed to set up a Committee comprising officials from Centre and states to look into the complaints with regard to anti-profiteering clause that seeks to prevent companies from making undue gains post GST rollout, Jaitley said.
The final rule with regard to functioning of the Committee will be framed later.
In all, the Council at its 15th meeting decided on tax rates on 6 items including rough diamond at 0.25 per cent and placed agriculture equipment at two slabs of 5 per cent and 12 per cent. Also, it approved two rules relating to transition and returns forms.
The GST Council also decided to amend the transition rules allowing traders and retailers to make claim of 60 per cent against the CGST or SGST dues where the tax rate exceeds 18 per cent. For tax rate below 18 per cent, it will be retained at 40 per cent.
The draft transition law provided that once GST is implemented, a company can claim credit of up to 40 per cent of their Central GST dues for excise duty paid on stock held by businesses prior to the rollout.
Several dealers are choosing to wait and watch rather than buy and holding on to inventories and lobbied the government seeking an increase in the credit limit.
Revenue Secretary Hasmukh Adhia said that for transition stock, the government will refund 100 per cent excise duty for goods costing above Rs 25,000, bears a brand name of the manufacturer and are serially numbered like TV, fridge or car chasis.
“On all those items, even if it is coming through the dealer, the manufacturer will give the credit transfer document to the distributor and the distributor will be able to take 100 per cent credit for the big ticket items,” Adhia said.
With regard to CSD canteens, Jaitley said since current price levels were to be maintained, so the current position where they maintain half the taxation benefit will be maintained.
Jaitley said the GST Council will meet again on June 11 and review the rates based on industry representations in case the fitment committee finds that there is a substantial increase from the present burden. It will also take up the rules for e-way bill and accounts and records.
Also, the company developing the technology backbone for GST — GST Network– made a detailed presentation on the amount of work done and IT preparedness.
The GST Council in its previous meeting last month had fixed over 1,200 goods and 500 services in the tax bracket of 5, 12, 18 and 28 per cent.
Prices of foodgrains, especially wheat and rice, has been exempt from GST. Currently, some states levy Value Added Tax (VAT) on them. While common-use products like hair oil, soaps and toothpaste as also electricity will cost less from July 1.
GST new tax rates will subsume all major levies including excise, service tax and VAT, unifying 16 different taxes, and make India a single market.
Here is the complete updated list:
Gold and rough diamonds do not fall under the current rate slab ambit and will be taxed at 3% and 0.25% respectively.
No tax will be imposed on items like Jute, fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, etc.
Hotels and lodges with tariff below Rs 1,000, Grandfathering service has been exempted under GST.
Items such as fish fillet, Apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will attract tax of 5 %,
Transport services (Railways, air transport), small restraurants will be under the 5% category because their main input is petroleum, which is outside GST ambit.
Apparel above Rs 1000, frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, cellphones will be under 12 % tax slab.
Non-AC hotels, business class air ticket, fertilisers, Work Contracts will fall under 12 per cent GST tax slab
Most items are under this tax slab which include footwear costing more than Rs 500, Bidi Patta, Biscuits (All catogories), flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors.
AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST.
Bidis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with choclate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use, will attract 28 % tax – the highest under GST system.
5-star hotels, race club betting, cinema will attract tax 28 per cent tax slab under GST