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Cereals, hair oil, soaps to cost less in GST; cess on cars

Press Trust of India  |  Srinagar 

Foodgrains and common-use products like hair oil, soaps and toothpaste as also electricity will cost less from July 1 when the is scheduled to be rolled out as the all-powerful Council today finalised rates for bulk of the items.

While the Council fitted all but six items in 5, 12, 18 or 28 per cent brackets, cars will attract the top rate as also a cess in the range of 1 to 15 per cent on top of it.

Smalls cars will be charged 1 per cent cess on top of 28 per cent tax, mid-sized cars will attract 3 per cent cess and luxury cars 15 per cent cess on top of the peak rate.

Aerated drinks too have been put in the 28 per cent bracket but the rates for bidis along with gold, footwear and branded items would be decided tomorrow.

The Goods and Services (GST) on coal has been brought down to 5 per cent from the current incidence of 11.69 per cent, thereby making electricity generation cheaper.

The rates for all but six items were finalised at the first day of the two-day meeting here of the Council, headed by Union Finance Minister Arun Jaitley and comprising state representatives.

Common use products like hair oil, soaps and toothpaste will be charged with a single national sales or of 18 per cent instead of present 22-24 per cent incidence through a combination of central and state government levies.

ACs and refrigerators will fall in the 28 per cent slab while life-saving drugs have been kept at 5 per cent rate.

All capital goods and all industrial intermediaries would attract 18 per cent instead of 28 per cent.

Milk and curd will continue to be exempt from taxation when the replaced current indirect taxes. 'Mithai' or sweets will attract 5 per cent levy.

Daily-use items like sugar, tea, coffee (barring instant coffee) and edible will attract the lowest rate of 5 per cent, almost the same as current incidence.

Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from the Currently, some states levy Value Added (VAT) on them.

"We have finalised rates for a majority of items as well as the exempt list (at today's meeting)," Jaitley told reporters here.

Out of the 1,211 items, the rate for all but six was decided on the first day, he said, adding the rate for items that would be decided tomorrow include gold, footwear, branded items and bidi.

"Rates have been finalised for the rest," he said.

Also, the for packaged food items is to be finalised.

Tomorrow's meeting will also decide on the rate of for services, the finance minister said.

"(With) the standard rate items of 12.5 per cent and 15 per cent, plus the cascading effect of local taxes, the rate was going up to 30-31 per cent. These 30-31 per cent taxes... Have all been brought down to 28 per cent.

"Of these, some are items to be used by common man soap, -- that has been brought down to 18 per cent. So there will be a substantial reduction as far as those items are concerned. We have kept one criteria in mind that the overall impact is not inflation, in fact it brings down the costs," Jaitley added.

Revenue Secretary Hasmukh Adhia said 7 per cent of the items fall under the exempt list while 14 per cent have been put in the lowest bracket of 5 per cent. Another 17 per cent items are in 12 per cent bracket, 43 per cent in 18 per cent slab and only 19 per cent of goods fall in the top bracket of 28 per cent.

As many as 81 per cent of the items will attract 18 per cent or less

On gold, states demanded a 4 per cent even though the rate is not among the 5, 12, 18 and 28 per cent approved bands.

Jaitley said there will be no inflationary impact as most of the rates which are at 31 per cent have been brought down to 28 per cent.

Coal will attract the of 5 per cent as against the current incidence of 11.69 per cent.

"Cereals will be in exempt list. But what is to be done with packaged and branded food that has to be separately decided. We are yet to make a decision on that," he said.

Jaitley said the key feature of today's rate decision has been that "rate under will not go up for any of the commodities. There is no increase. On many commodities, there is a reduction particularly because the cascading effect of is gone."

"Of several commodities, we have consciously brought down the In the overall basket there would be a reduction, but we are banking on the hope that because of a more efficient system, evasion would be checked and buoyancy would go up. That despite reduction the revenue neutrality and buoyancy thereafter would be maintained," he added.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 18 2017. 21:22 IST