The Good, Bad And Ugly Of GST

If there’s one word that sums up the response of India’s businesses and consumers to the country’s new national sales tax, it’s ‘confused.’

Will premium economy seats be taxed as economy class or business? Is a chocolate-coated biscuit a biscuit or chocolate? These are the questions now troubling businesses large and small across India’s $2.3 trillion economy.

The roll out of the goods and services tax came less than a year after the government’s shock withdrawal of 86 percent of the nation’s currency, which helped knock India’s GDP growth down to 6.1 percent from 7.1 percent in the January-March quarter and eliminated as many as 1.5 million jobs.

After more than a decade-long journey, the biggest tax reform since independence in 1947 became a reality on July 1, combining more than a dozen levies into one tax.

Many Indians responded by sharing their first GST bill on WhatsApp, Facebook and Twitter. The novelty soon wore off. Small traders and businesses struggled to issue invoices and battled with the new software, with some forced to provide handwritten invoices to customers.

In an attempt to cut through the confusion, the government held tax ‘master classes’ and published advertisements in the newspapers showing the revised prices alongside the old prices of goods.

About two dozen states of 29 have abolished check points at their borders, where tax compliance and goods inspections used to delay deliveries — often by days.

Transportation of illegal goods has reduced because those businesses cannot provide GST-compliant bills.

“People are finding it tough to understand the GST,” said Pradeep Singal, national president of the All India Transporters Welfare Association. “This has meant that companies had ordered in advance and are still using old stocks,” pushing down transport business by 30 percent.”

Traders, particularly in small towns, are struggling with their lack of knowledge of the new tax regime — compliance obligations, raising invoices and accessing input credits, said Praveen Khandelwal, secretary general of the Confederation of All India Traders.

Small merchants and e-commerce companies are tripping over a dizzying array of documents and the complicated classification system that determines what percentage of tax will be charged. Thousands of small merchants have stopped selling on e-commerce sites because they can’t meet these new requirements.

Add to that, there’s multiple rates for various products. Footwear below Rs. 500 attracts one rate and above that price attracts a higher tax rate, leaving suppliers confused over which rate they should apply.

“Any new law would have interpretation issues,” said Pratik Jain, national leader indirect tax at PWC India. “Like what rates would be charged for an economy-plus ticket issued by some airlines? It should be charged at economy rates.”

Whether the GST network can seamlessly match billions of credits, facilitate tax collections, provide refunds and check evasions will be tested when most of the traders and companies file returns in September.

Businesses have not yet uploaded their sales and purchases invoices generated post-July 1 on the network, as that part of the system has not been functioning and companies have been allowed to file late returns for first two months.

“The biggest problem being faced right now is that the GSTN has still not formalized their format for firms to pay taxes,” said Sachin Menon, national head of indirect tax at KPMG India. “We have some multiple revisions in format in the last couple of weeks alone. Companies providing GST software are having a tough time.”

Small business owners, as well as traders and shopkeepers who have never turned on a computer, are scrambling to acquire the skills to navigate these technological challenges.

Prices of some products are varying according to location as traders have not fully implemented the new structure and profiteers have stepped in, hindering the creation of a single Indian market.

For instance, Maruti Suzuki India Ltd.’s Baleno Sigma gasoline model cost Rs. 6.35 lakh near Navi Mumbai in Maharashtra while the same model is priced at Rs. 6.65 lakh in Bengaluru in Karnataka.

“A quick comparison of price of motorcycles and cars across the country reveals a convergence in price post-GST,” equity analysts of Jefferies India Private Ltd., the unit of the global investment banking firm said in a July 13 note.

Movie tickets in Tamil Nadu and Maharashtra became costlier as the states imposed additional taxes, defeating the purpose of a unified tax. The central government, however, has set up a panel of officials to monitor any price rise, shortage of commodities and implementation of GST.

Textile traders have been protesting to demand that fabrics be exempted from the tax. The government is reluctant to agree, saying it will break down the input tax credit chain.

The industry won’t be able to sustain the rise in costs, given that 60 percent of the trade is in the informal sector, said S. Sunanda, secretary general of the Confederation of Indian Textile Industry, which represents more than 3,000 units.

“Individuals form about 65 percent of units involved in our trade,” Sunanda said. “The trade will be hit by cheaper imports from China, Bangladesh and Indonesia.”

There’s a 5 percent GST on cotton, however the government raised tax rates on man-made fiber to 18 percent from 12 percent.

“While the medium-to-long run benefits of GST cannot be disputed, the short-run impact on growth is expected to be negative as compliance, confusion and inventory effects take a toll,” said Abhishek Gupta, India economist at Bloomberg Intelligence. “However, recorded GDP growth is still likely to show an increase as part of the shadow economy shifts to the formal sector.”

Source : http://www.ndtv.com/business/the-good-bad-and-ugly-of-gst-1728916

items of gst with rates    GST 0% Rate Category Items List  

items of gst with rates    GST 5% Rate Category Items List 

items of gst with rates    GST 12% Rate Category Items List

items of gst with rates    GST 18% Rate Category Items List 

items of gst with rates    GST 28% Rate Category Items List 

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Tax officials to ‘Go Slow’ on enforcements under GST

Indirect tax authorities will go slow on enforcement actions under the goods and services tax for the first six months, to give time for the new tax regime to settle down, Central Board of Excise and Customs chairperson Vanaja Sarna has said.

“CBEC has enforcement authorities and I have specifically said that the first three to six months are a go-slow,” Sarna said at a CII event on Wednesday.

“I don’t want small cases to be made,” she said, adding that there would be genuine errors due to lack of understanding of the new tax regime in the initial days. “I’m definitely not looking at any hard line attitude to start with,” Sarna said. “We would like it to be a complete success and we have enough legacy work in enforcement to be busy and we are not plunging into this now,” she said.

GST rolled out on July 1. Sarna said CBEC has to encourage businesses to come into the GST fold. “With the kind of input tax credit (ITC) being offered, assessee base will widen,” she said.

GST has subsumed 17 indirect taxes and 23 cesses, rolling out a far simpler regime, but the compliance systems are more advanced and online.

Officials have been answering queries on a daily basis to remove any misgivings on account of tax as also explain the procedures.

The Twitter account set up to answer queries by industry has been getting 13,000 queries per day. Sarna said CBEC will come out with second round of FAQs to clarify issues related to GST, while admitting that there have been some glitches.

CBEC had constituted 18 sectoral groups to look into various issues faced by different sections of industry.

Of these, three groups have week-long strike following the Centre’s assurance to look into their demand of rollback. “It is an issue that has snowballed, but it is not something which cannot be settled,” Sarna said. “The issue is that textile sector is taxed for the first time. So, anybody who comes into the net would feel the pinch,” she said.

Sarna said CBEC has received representations from textile traders and is looking into any issue they may be facing. She said industry still has time to present its wish list. submitted their report. The law committee is examining the reports, Sarna said. “We are not looking to dismantling these working groups and they would assist the industry in the problems they face in the GST regime,” she said.

REVISION IN RATE
Sarna said GST rates will not be revised unless there is an anomaly, or the rates are unjustified.

The comments follow textile traders’ demand for abolishing 5% GST on textiles. Surat textiles traders called off their two-week-long strike following the Centre’s assurance to look into their demand of rollback.

“It is an issue that has snowballed, but it is not something which cannot be settled,” Sarna said. “The issue is that textile sector is taxed for the first time. So, anybody who comes into the net would feel the pinch,” she said.

Sarna said CBEC has received representations from textile traders and is looking into any issue they may be facing.

She said industry still has time to present its wish list.

Source : http://economictimes.indiatimes.com/news/economy/policy/tax-officials-to-go-slow-on-enforcements-under-gst/articleshow/59672259.cms

 

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GST Network to begin accepting fresh registrations from June 25

The Goods and Services Tax Network (GSTN) portal which has so far only been accepting requests for migration from the current indirect tax regime to the GST system will now start accepting fresh registrations starting June 25.

It will also be open from June 25 for a period of three months for existing taxpayers registered under central excise, service tax and value-added tax (VAT), GSTN said in a statement here on Friday.

“Apart from taxpayers who have not yet migrated, new taxpayers who are entering the tax bracket for the first time can also now start registering from June 25. With just seven days to go for the GST implementation, we are certain of a smooth roll out of the regime,” Navin Kumar, Chairman, GSTN said.

The registration will also start for Goods and Services Tax (GST) practitioners, Tax Deductors at Source (TDS) and e-commerce operators (TCS), GSTN said in a statement here on Friday.

The GSTN portal was open from November 8, 2016, till April 30, 2017, and then again for 15 days in June for enrolment of existing taxpayers.

Registration with the GSTN is necessary for doing business in the GST regime as businesses will have to upload monthly supply data as well as file return forms on this portal.

“People should not panic. If you are left out, you will get another opportunity because the law says anybody who is registered under taxes which are subsumed under GST if they have a valid PAN then they will be given a valid registration,” Kumar said.

“We are going to send provisional registration to 65.5 lakh taxpayers who have validated their email addresses and mobile numbers. Those who have not completed Part-B of the enrolment form, can do so in next three months and get their permanent registration certificate,” he added.

The GST referred as the most significant tax reform in India post-independence, would usher in a common national market by doing away with a complex web of local and central taxes and incorporating them into a single levy.

“As the technology provider of the regime, GSTN has been working tirelessly to ensure there are no delays in the commencing of the ambitious indirect tax regime. The GSTN has set up a robust portal already equipped to handle as many as 2.6 billion transactions every month. The GST Common Portal will enable taxpayers to meet the GST compliance requirement like filing returns and making tax payments,” the statement said.

Source : http://economictimes.indiatimes.com/news/economy/policy/gst-network-to-begin-accepting-fresh-registrations-from-june-25/articleshow/59289007.cms

items of gst with rates    GST 0% Rate Category Items List  

items of gst with rates    GST 5% Rate Category Items List 

items of gst with rates    GST 12% Rate Category Items List

items of gst with rates    GST 18% Rate Category Items List 

items of gst with rates    GST 28% Rate Category Items List    

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FMCG companies may not make higher profits on lower GST rates

Lower rates of GST may not necessarily mean higher profits for Indian consumer firms, while the converse is equally true for those selling in limited pockets. The reason is a simple averaging of tax rates across all states instead of weighted averages, which would have mapped sales volumes to levies in the relevant states.

“On the surface, tax rates of certain products would have seemingly come down compared to existing rates under GST. But some companies may still have to increase prices,” said Pratik Jain, National Leader — Indirect Tax at PwC India. “This is mainly because for some products, the bulk of the sales take place in a few states where the current VAT may have been lower.”

Most products with a direct relationship between GST rates and profits include highend consumer items mainly sold in Mumbai, New Delhi, Bengaluru, and Chennai.

The simple averaging of tax rates could affect products such as shower gels, body washes, expensive paints, high-end refrigerators, washing machines, LED lights, and costly cellphones.The converse is equally true for many companies that sell about 60-80% of their products in two to four states: These firms could see a jump in their profits even when tax rates under GST are set to rise.

An email sent to the Central Board of Excise and Customs (CBEC) and revenue secretary Hasmukh Adhia, did not elicit any response until this report went for publication.

LITTLE SCOPE
According to a top tax officer, it would have been virtually impossible for the government to take weighted averages into consideration. “There is no reliable data that could have helped the government to calculate weighted average of taxes paid by companies. Also, I doubt even companies collect sales data of each product in each state,” he said.

Experts point out that in some way, this could also impact the anti-profiteering clause under GST. “The government wants to ensure that the introduction of GST does not lead to inflation. Hence, it is keen to ensure that tax rate reductions are passed on to customers in the form of lower prices and has, therefore, introduced the anti-profiteering rules to keep inflation under control,” said MS Mani, senior director, Deloitte India.

Experts point out that in some instances, a handful of states imposing higher taxes has also distorted the average tax rate, which in turn influenced the GST rates.

The average rate was calculated by adding prevailing tax rates across India, and then dividing the total by the number of states and union territories.

People close to the development said the change in tax rates could also lead to increasing or decreasing inventory, as is evident in the case of high-end mobile phones.

Source : http://economictimes.indiatimes.com/news/economy/policy/fmcg-companies-may-not-make-higher-profits-on-lower-gst-rates/articleshow/59276216.cms

 

items of gst with rates    GST 0% Rate Category Items List  

items of gst with rates    GST 5% Rate Category Items List 

items of gst with rates    GST 12% Rate Category Items List

items of gst with rates    GST 18% Rate Category Items List 

items of gst with rates    GST 28% Rate Category Items List    

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GST example of national integration

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Thursday passed a resolution thanking chief ministers and finance ministers from all the states as well as political parties for extending cooperation for the introduction of GST.

“GST is a shining example of national integration and of fiscal federalism at its best. It is a testimony to the working of India’s federal democracy. It has been made possible because of close cooperation between Central Government and all the State Governments as well as all political parties,” an official statement said.
The Centre has worked closely with the states over the last three years to ensure that GST is rolled out from July 1. The insistence that all decisions in the GST Council will be taken by consensus meant that the original deadline was missed but everyone came on board on all aspects, including the revised launch date. The cabinet also thanked lawmakers at the Centre and the states, who had approved several legislations, including amendment to the Constitution to make GST possible.

“GST is the biggest tax reform in independent India. It is one of the most sweeping indirect tax reforms in any federal polity in the world,” it said.

Source : http://timesofindia.indiatimes.com/business/india-business/gst-example-of-national-integration/articleshow/59278312.cms

 

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Retailers need to file single GST return every month: Hasmukh Adhia

Days before the rollout of the landmark GST, the government today sought to dispel the notion that the new tax regime will be cumbersome and compliance- heavy, saying taxpayers need to file only one return every month, similar to what they presently do.

In an interview to PTI, Revenue Secretary Hasmukh Adhia said the notion that assessees will have to file three returns every month is unfounded and retailers or B2C dealers need not give invoice wise details every month.

“Eighty per cent of the businesses will have to simply file total turnover detail in return because they are all B2C dealers or retailers. Return filing is very easy, people need not worry about filing process, it is very transparent and is done by machine,” Adhia said.

Explaining filing of returns, he said when a supplier uploads details of sale invoices, a GST Return-1 is generated by 10th of next month.

The details from the suppliers in GSTR-1 automatically gets updated in the GST Return-2 (GSTR 2) of the purchaser. GSTR-2 is to be filed by 15th of next month and is just a few clicks on computer. GSTR-2 doesn’t need full filing of return.

“GSTR 2 is not to be filed by anybody. It will be appearing in the computer on their own account and they can confirm it. If there is any transaction missing in purchase which computer is not showing because the person from whom you bought has forgotten to put it, then you get a right to add it. It is an auto-populated return. Click it and accept it online,” he said.

Adhia said retailer and B2C suppliers need not worry about the return filing procedure as they have to file only turnover wise detail in GSTR-1.

While only B2B dealers have to file both GSTR-1 and GSTR- 2, retailers do not need to file the GSTR-2 as they have to only match with what the dealer has uploaded on the GST Network.

“Ordinary people need not worry…It is not at all complex and people need not worry. 80 per cent of the businesses will have to just file total turnover,” Adhia said.

By 17th of the month, both the supplier and the recipient would have to reconcile the invoice details and file the third return (GSTR-3) by 20th of the month.

GSTR-3 is combination of GSTR-1 and 2 and is computer generated. It gives the summary of the total output tax liability, input tax credit and the difference is the tax liability for the month.

“Out of three returns which are prescribed, only one return has to be filed by the retailer. The remaining two returns are auto-generated by the computer which is only a facility given to them to see so that if there is any mistake they can correct it,” Adhia said.

Adhia said only in case of B2B dealers, invoice wise details are required. “Those number of dealers are very few in the country”.

The GSTN will launch an excel sheet format for B2B dealers so that they can keep the invoice wise details ready and can upload it on the 10th of every month.

In the excel sheet, the businesses would have to give details of transaction, like invoice number, GSTIN of buyer, commodity sold or services given, value of the goods or services sold, the tax incidence and taxes paid.

The GST Council, chaired by Union Finance Minister Arun Jaitley and comprising state counterparts, has already relaxed return filing rules for businesses for the first two months of the rollout of the new indirect tax regime.

As per the revised return filing timeline decided by the Council, for July, the sale returns will have to be filed by September 5 instead of August 10. Companies will have to file sale invoice for August with the GST Network by September 20 instead of September 10 earlier.

As regards traders, manufacturers or eateries opting having turnover up to Rs 75 lakh and have opted for composition scheme, they will just have to give their total turnover in GSTR-1 and no invoice wise detail is required.

These businesses will have to file just one return every three months, Adhia said.

Such returns are to be filed by 18th of the month in the succeeding quarter.

Source : http://economictimes.indiatimes.com/news/economy/policy/retailers-need-to-file-single-gst-return-every-month-hasmukh-adhia/articleshow/59254280.cms

 

items of gst with rates    GST 0% Rate Category Items List  

items of gst with rates    GST 5% Rate Category Items List 

items of gst with rates    GST 12% Rate Category Items List

items of gst with rates    GST 18% Rate Category Items List 

items of gst with rates    GST 28% Rate Category Items List    

 

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Govt notifies 18 sections, 2 rules for GST

Days ahead of the rollout of Goods and Service Tax, the government today notified sections in the GST Act dealing with mandatory registration of current indirect tax payers in the new regime.

As many as 18 sections relating to registration of current central excise, service tax and VAT payers with the GST-Network (GSTN) as well as transitional provisions were notified today.

As a precursor to GST, the Central Board of Excise and Customs (CBEC) has also notified two rules — registration and composition levy.

All the notifications would be effective from June 22.

GST, which is to be rolled out from July 1, will unify over a dozen central and state levies into one and all those currently paying such taxes need to migrate to the new system.

Every business carrying out a taxable supply of goods or services with turnover exceeding the threshold limit of Rs 20 lakh will be required to register.

GST registration would allow for seamless input tax credit.

The CBEC has also notified ‘www.gst.gov.in’ as the common’Goods and Services Tax Electronic Portal’.

As many as 65 lakh out of the 80 lakh taxpayers have already migrated from various platforms to GST.

All of these businesses will be assigned a unique Goods and Services Tax Identification Number.

The Sections in the Central GST (CGST) Act notified provide for all suppliers, anyone making any inter-state taxable supply and every existing licence holder and business entity, to register for GST.

Input service distributor, e-commerce operator and person supplying online information and data base access or retrieval service are also required to register.

The provision exempts agriculturist from registration to”the extent of supply of produce out of cultivation of land”.

It also exempts “any person engaged exclusively in thebusiness of supplying goods or services or both that are notliable to tax or wholly exempt from tax”.

The notified sections provide that a person who occasionally supplies goods and/or services in a territory where GST is applicable but he does not have a fixed place of business, would be treated as a casual taxable person.

A person with multiple business verticals in a state may obtain a separate registration for each business vertical.

PAN is mandatory for GST registration except for a non-resident person who can get GST registration on the basis of certain other documents.

Source : http://economictimes.indiatimes.com/news/economy/policy/govt-notifies-18-sections-2-rules-for-gst/articleshow/59238210.cms

 

items of gst with rates    GST 0% Rate Category Items List  

items of gst with rates    GST 5% Rate Category Items List 

items of gst with rates    GST 12% Rate Category Items List

items of gst with rates    GST 18% Rate Category Items List 

items of gst with rates    GST 28% Rate Category Items List    

 

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GST Rollout From July 1, Late Filing Allowed For First Two Months

The government on Sunday reiterated that the nation-wide Goods and Services Tax (GST) will be rolled out on July 1 as planned but it will allow companies to file late returns for the first two months so that they can adapt to a new online filing system. Finance Minister who heads the GST Council met in the national capital today to discuss the roll out of the Goods and Services Tax on July 1. The next meet of GST Council is expected to take place on June 30 on the eve of the launch, Finance Minister Arun Jaitley said.

  1. The government will let companies file late returns for the first two months so that they can adapt to a new online filing system. Under The GST, the biggest tax reform in India’s history will require firms to file three online returns each month. Some business lobby groups have urged a delay to the rollout to allow more time to get ready.
  2. Arun Jaitley, speaking after a meeting of a GST Council, said there would be “a slight relaxation of time” covering July and August before the strict GST filing timetable would apply from September.
  3. Companies would be able to file simplified, aggregate returns in July and August, with a deadline of the 20th of the following month, said Hasmukh Adhia, a finance ministry official steering the launch of the tax.
  4. Once fully up and running, the GST would require companies to file a complete return of their sales invoices by the 10th of the following month, with a second of their purchase invoices by the 15th. A third return would calculate their tax bill.
  5. Meanwhile, in relief for AC hotels, the Council decided to raise the threshold for the 28 per cent tax to Rs. 7,500 from Rs. 5,000 at present. This would mean that an 18 per cent GST will be levied on bills of Rs. 2,500-7,500.
  6. The GST Council decided to tax lotteries in two segments — with state-run ones attracting 12 per cent GST and the state- authorised 28 per cent.
  7. The GST Council also cleared six rules, including anti-profiteering. “I hope we are not compelled to use it (anti-profiteering),” Mr Jaitley added.
  8. “A number of companies and trade have been raising the issue of lack of preparedness. We don’t have the luxury of time to defer GST implementation,” Mr Jaitley said.
  9. The Goods and Services Tax is touted as the biggest reform since Independence, the incoming indirect tax regime – GST – will subsume a variety of central and state levies. With GST, the government aims to create a common market, preventing ‘tax-on-tax’ and making goods and services cheaper.
  10. The Goods and Services Tax Council had earlier set rates – ranging from 5 per cent to 28 per cent – for a multitude of goods and services under GST.

Source : http://www.ndtv.com/india-news/gst-rollout-from-july-1-late-filing-allowed-for-first-two-months-10-facts-1713873

items of gst with rates    GST 0% Rate Category Items List  

items of gst with rates    GST 5% Rate Category Items List 

items of gst with rates    GST 12% Rate Category Items List

items of gst with rates    GST 18% Rate Category Items List 

items of gst with rates    GST 28% Rate Category Items List    

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Tryst with GST: Govt plans midnight launch; event may be held in central hall of Parliament

Like India’s tryst with destiny on the midnight of August 15, 1947, the government is planning to roll out the goods and services tax from the central hall of Parliament on July 1 after all the states came on board on Sunday for the most ambitious tax reform initiative since Independence.

Government sources said a mega launch for GST+ is planned, where the focus is on ensuring that consumers gain from the initiative+ through lower incidence of taxes as the cascading effect of multiple taxes — from central excise and VAT to service tax and entry taxes — is done away with.

Although the original plan was to launch the initiative, which has been in the works for over a decade, from Vigyan Bhawan, which has been home to a majority of the meetings of the GST Council comprising Union and state finance ministers, other options such as the central hall are also being explored, where state leaders will also be invited, said sources.

We don’t have the luxury of time to defer the implementation of GST. The Council decided categorically it will be implemented from July 1 onwards,” finance minister Arun Jaitley said after a GST Council meeting on Sunday, where rates for all goods and services were fixed and almost all the rules were finalised.

On June 30, the GST Council will meet to remove remaining glitches. “There is no doubt now. GST will be rolled out out from July 1,” Kerala FM Thomas Isaac said.

Only a few states are left to enact state legislations with Jammu & Kashmir seen as the sole glitch.

 West Bengal : which had been vocal in its opposition since demonetisation, has promulgated an ordinance and the state leadership is learnt to have pledged its support to GST. Jaitley said that Tamil Nadu, Punjab and Kerala would enact their laws over the next few days.

 

J&K, however, is currently not on board despite the PDP-BJP government being keen to enact laws as National Conference has flagged concerns over the state losing autonomy.
Abdul Rahim Rather, J&K finance minister during the NC regime, who was pushing GST in his role as the chairman of the empowered committee of state FMs, is now leading the charge against GST laws.

 

Source : http://timesofindia.indiatimes.com/business/india-business/tryst-with-gst-govt-plans-midnight-launch-event-may-be-held-in-central-hall-of-parliament/articleshow/59209736.cms

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GST : TV, AC to cost more; smartphones to be cheaper

Aerated drinks and consumer durables like TV, AC, washing machines and refrigerators will cost more, while smartphones, small cars and daily use items will turn cheaper when the GST is implemented from July.

An analysis of the tax rates decided by the all-powerful GST Council for over 1,200 goods and 500 services revealed that daily use items like soap and toothpaste will cost less while fresh fruits, vegetables, pulses, bread and fresh milk will continue to be exempt from any tax.

Economy-class air travel will be slightly cheaper and so will be hiring a taxi as tax on such travel has been brought down to 5 per cent in the Goods and Service Tax (GST) regime from the current service tax of 6 per cent.

Foodgrains may also become cheaper as they have been put in zero-rated commodities list. Currently, some states levy purchase tax of 2-5 per cent on foodgrains, which will be abolished under GST.

The GST Council had earlier this month put over 1,200 goods and 500 services in four tax slabs of 5, 12, 18, 28 per cent.

While the tax incidence on certain commodities like processed food, confectionery items and ice cream would be brought down to 18 per cent from 22 per cent, personal care items like shampoo, perfumes and make-up items would cost more as the tax rate will go up to 28 per cent, from the existing 22 per cent.

Among the goods, mass consumption items like fresh fruits, vegetables, pulses, bread and milk have been exempt from any taxes, and the same holds true for services like health and education.

Although the real estate sector has been kept out of the GST, under-construction property would be subject to 12 per cent GST rate, as against the present incidence of 15 per cent service tax.

Taxi aggregators will also see marginal reduction in tax rates as the effective rate comes down to 5 per cent from 6 per cent. Motorcycles could also see some reduction in prices as the levy will come down by a percentage point to 28 per cent.

While electrically operated 2/3 wheeler vehicles will also see a decline in taxes from 14 per cent to 12 per cent, solar panels could see a steep hike in tax rates to 18 per cent from the present 0-5 per cent.

The tax incidence on soaps and toothpaste under the GST regime would also come down to 18 per cent from the existing 25-26 per cent.

Cost of packaged cement is expected to ease as the tax rate will come down to 28 per cent from the existing 31 per cent.

Medicines, including ayurvedic drugs, as also medical devices will face a lower incidence at 12 per cent, compared to the existing 13 per cent.

Smartphones should also get cheaper as the current tax incidence on them is more than 13.5 per cent, while the proposed GST rate is 12 per cent.

Besides, puja items, including those for havan, bindi and kumkum have been kept in the exempt category.

Taxation on entertainment, cable and DTH services shall also come down as the ‘entertainment tax’ levied by states has been subsumed in the GST and the effective levy has been kept at 18 per cent.

Currently, these services attract an entertainment tax in states in the range of 10-30 per cent over and above the service tax levy of 15 per cent.

Under the GST regime, five-star restaurants will see an increase in tax incidence, while the levy on non-AC restaurants may come down marginally.

At present, non-AC restaurants are subject to state VATs in the range of 12.5-20 per cent, while AC restaurants are levied with a 6 per cent service tax on top of state VAT.

Under the GST regime, restaurants not having AC and liquor licence will attract 12 per cent levy. On restaurants having AC or liquor licence, the tax would be 18 per cent. Five-star or above restaurants will be taxed at 28 per cent.

Source : http://economictimes.indiatimes.com/news/economy/policy/tv-ac-to-cost-more-smartphones-to-be-cheaper-under-gst/articleshow/58879937.cms

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