Wednesday, October 16, 2019

GST Council fixes 4-tier Tax Slab for Goods & Services | AIB

GST (Goods And Sevices Tax) is the newly imposed system of indirect taxation in India that will abolish all indirect taxes levied on goods and services by the central and state govt. It is also clear that there will ‘Dual tax system,’ both center (CGST) and state govt (SGST) has the power to levy the tax on goods and service. But, state govt not given the authority to collect the tax on imports still it has integrated with central govt on another tax (IGST).

The idea to introduce GST mainly to transform India into one single market that widens the tax base helps in the growth of GDP. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages. Moreover, central govt maintained that cost of other services would not rise and inflation would come down by at least 2%.

GST will kickstart from July 1, the fixation of charges for goods and services has completed round one, and few remain. There will be a four-slab structure that is 5%, 12%, 18% and 28% for taxation with a usual rate of 18% that will apply to everyone. 

Here is the list of few items that attracts the tax slabs:

5% Tax Slab
Goods: Frozen Vegetables, Paneer, Milk, Coffee, Tea, Pizza, Kerosene, Spices, Medicines.

Services: Transport and Small Restaurant.

12% Tax Slab
Goods: Frozen meat products, Dry fruits in packets, Butter, Cheese, Ghee, Animal fat, Sausage, Fruit juices, Namkeen, Ayurvedic medicines, Tooth powder, Agarbatti, Drawing books, Umbrella, Sewing machine, and Cellphones.

Services: NON-AC hotels, Business class air ticket, Fertilisers, and Work contracts. 

18% Tax Slab
Goods: Sugar, Pasta, Cornflakes, Pastries, and cakes, Preserved vegetables, jams, Sauces, Soups, Ice Cream, Instant food mixes, mineral water, Tissues Papers, Envelopes, Tampons, Notebooks, Steel products, Printed circuits, Camera, Speakers, and Monitors. 

Services: AC hotels, Telecoms, IT services, Branded Garments and Financial Services.

28% Tax Slabs
Goods: Chewing Gum, Chocolate, Waffles, Pan masala, paint, deodorants, shaving creams, Hair shampoo, Dye, Sunscreen, Ceramic Tiles, Water Heater, Dishwasher, Washing Machine, Vacuum Cleaner, Weighing Machine,  ATM, Vending Machines, Shavers, Automobiles, Motorcycles, Aircraft for personal use.

Services: Five-star hotels, Movie tickets, Race Courses, and Casinos.

No Tax
Goods: Food Grains, Fresh Meat, Fish, Chicken, Eggs, Milk, Curd, Natural Honey, Fresh Fruits, and Vegetables, Flour, Besan, Bread, Sindoor, Stamps, Legal Papers, Printed Books, Newspapers, Bangles, Handloom, etc. 

Service: Hotels and Lodges with charge below Rs 1,000.


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