The final countdown for goods and services tax regime has begun. The Centre is likely to meet July 1 deadline. But, even if it fails, the Modi government has time till September 15 to roll out GST.
Once the Parliament session is over, the GST Council has another task to perform – to categorise about 5,000 goods and services in the four GST slabs before what Finance Minister Arun Jaitley called a ‘revolutionary’ reform is rolled.
Read All About GST from Beginning
The GST Bill lays down a destination taxation regime where end users or consumers will be taxed. The GST Council made it a four-tier tax structure with lowest tax slab fixed at 5 per cent followed by 12, 18 and 28 per cent brackets.
Justifying the four slabs, Finance Minister Arun Jaitley yesterday said that ‘a BMW car’ cannot be taxed the same way as ‘hawai chappal’.
THE OTHER SIDE OF GST
There is a theoretical possibility of GST rate going up to 40 per cent if the flexibility given to the Centre and states are factored in. Essentially, GST Bill does not provide for what the government has been promoting as ‘One Nation, One Tax’ regime.
The state and Centre will still be levying separate taxes on goods moving from one city to other and one state to other.
The all kinds of Cess – Swachh Bharat et al – will still be imposed on luxury and what is called demerit goods like cigarettes etc. The cess will be provisionally collected for five years after rolling out of GST. The proceeds will be used to compensate states incurring losses due to GST regime.
However, the GST will bring down the number of taxes currently being imposed in the country. Today more than 25 kinds of taxes including income tax are imposed in the country. The GST Bill is likely to reduce the number of taxes to around half-a-dozen.
SLABS AND ARTICLES THAT YOU USE
Under the present taxation system food articles and agriculture produces are not taxed. The same arrangement is likely to continue under the GST. For the other about 5,000 commodities and services, the nearest tax slab will be applied.
The GST Council is likely to begin fresh rounds of meeting to finalise the tax rates for goods and services. However, according to the GST Bill, services cannot be taxed over 18 per cent.
A five per cent tax will be imposed over articles of mass consumption like spices, packaged salts etc. Food grains to remain untaxed under the GST.
Most of the items used by aam aadmi will be taxed at 12-18 per cent rate. This is the area where common man is likely to be benefitted the most. Articles like soap, toothpastes, oil etc will be placed in the 12-18 per cent bracket. These articles are currently being taxed over 20 per cent rate.
The white goods – popular with the emerging middle class Indians – are currently being taxed around 30-31 per cent. Such goods – refrigerators, washing machine, air conditioners – will be brought to nearest slab of 28 per cent making them cheaper once GST is rolled out.
Luxury goods and sin or demerit goods will attract 28 per cent GST plus cess. Such articles include luxury cars, tobacco products, aerated drinks and the like.
People working at offices and are used to getting subsidised eatables, goods or services will have to pay more as GST Bill brings such places under the tax net.
Under the GST regime, an employee, who gets free goods or services, will have to pay taxes for the same. Free or subsidised facilities like food or beverages at workplace, club or fitness centre membership, cab facilities will be brought under the tax net.
India Today, 30 March 2017