Final GST rates out, slabs fixed at 5%, 12%, 18% & 28%
Under the present arrangement, Govt. has decided to implement a 4-slab tax structure under GST regime, which shall cover every product and commodity sold or bought in India.
Interestingly, slab zero is 0% tax rate which has been finalized for 50% of basic commodities included in the Consumer Price Index, which will help rural population to a greater degree, and help in controlling inflation.
Under 0% tax rate, commodities such as food grains, rice, wheat are included.
The first slab is 5% tax, under which products of mass consumption are included such as spices, tea and mustard oil.
Second slab is 12% under which processed food items has been included.
Third slab is 18% tax, under which items such as soaps, oil, toothpaste, refrigerator, and smartphones have been included. Right now, these products are taxed more than 25% tax rates, which would go down after GST is implemented.
Fourth slab is 28%, but there are two tiers under that: Under 28% slab, white goods and cars are included. Currently, whatever products are included in the 27-31% would be included in this tax bracket.
Meanwhile for 28% plus cess, sin products such as luxury cars, tobacco products, pan masala and aerated drinks are included. This cess would be applied by Centre, in a manner which allows higher tax which is currently charged.
Hence, if some tobacco products attract 32% tax currently, then GST regime, Centre will apply a cess charge of 4% besides 28% as finalized yesterday.
During the first year of GST implementation, overall loss to states is expected at Rs 50,000 crore. The cess on 28% besides energy cess would be used by Centre to compensate for this loss.
Ecommerce, Digital and IT industry would be especially looking out for tax slabs for services industry, which is expected to be finalized around 15-18%.
On Friday, the GST Council will again meet to decide the sharing of administrative powers between Centre and State Governments. As per various analysts, that would be the real test of character for GST Council members, as both the parties would try to seize as much control as they can.
- Posted on Nov 4, 2016
- By Deep Patel
- 0 Comments