India’s most awaited and game-changing Goods and Services Tax Bill is out after attaining the massive support from all the houses including the judiciary. The GST Bill is all set to be implemented throughout the country from July 1st of 2017. From the very inception, this bill is believed as the life savior for many categories of people.

The primary objective of the bill is to take care of the all classes of people, protect them from being looted. Everyone agreed to GST as it develops the idea of imposing the unified tax in which VAT, customs, and duties and service tax were included. This tax will also serve to reduce the current costs of production and boost the manufacturing sector.

It is expected that under the new GST regime, the cost of manufactured goods will come down, ironically the cost of services is expected to increase by certain factors.

GST rates:

The GST Council, headed by Jaitley and of which all states Finance Ministers are members, has approved four main tax slabs — 5 per cent, 12 per cent, 18 per cent and 28 per cent that aims to lower tax incidence on essential items and to keep the highest rate for luxury and demerits goods.

The lowest rate of 5 per cent will be on items of mass consumption which are used particularly by common people. The second and third category of standard rates of 12 and 18 percent will accommodate most of the goods and services. The fourth slab of 28 per cent is levied mainly on white goods such as refrigerators, washing machines etc.

Items That Are Exempted under GST:

Under GST, the government has fixed GST rates on 1,211 goods and 500 services in the range of five to 28 per cent. Certain items such as alcohol, petrol, diesel and natural gas will be exempt under the GST. In addition to these, the GST Council has also classified certain items under the 0 percent tax rate, implying that GST will not be levied on them.

This list includes items of daily use such as wheat, rice, milk, eggs, fresh vegetables, meat, fish, sindoor, bindi, stamps, judicial papers, printed books, newspapers, bangles, handloom, bones and horn-cores, bone grist, bone meal, kajal, children’s’ picture, drawing or coloring books, human hair.

Some services such as education, healthcare, hotels and lodges with tariff below Rs 1,000, grandfathering service have also been kept out of the GST purview. Rough precious and semi-precious stones will, however, attract GST rate of 0.25 per cent.

GST List of items that get cheaper and expensive from July 1:

List: Source

FMCG and Retail:

Harmonized System of Nomenclature under GST

HSN	Description of goods	Rate
1904	Puffed rice	Nil
1905	Pappad, bread	Nil
	Water, Tender coconut water	Nil
1901	Mixes and dough	5 percent
1902	Seviyan	5 percent
1905	Pizza bread, rusks, toasted breads	5 percent
2106	Sweetmeats	5 percent
2009	Fruit juices	12 percent
2101	Roasted Chicory, Roasted coffee, yeast preparations	12 percent
2106	Namkeens in ready for consumption form	12 percent
1901-1905	Preparations for infant use, pasta, noodles, pastries, cakes	18 percent
2001-2008	Preserved fruits, vegetables, nuts, fruit jams	18 percent
2101-2106	Extracts, essence, and concentrates of  tea or mate, sauces preparations, soups, ice creams, food mixes including instant food mixes	18 percent
2101	Extracts, essences and concentrates of coffee	28 percent
2106	Food preparations not covered elsewhere, protein concentrates, custard powder	28 percent
2202	Aerated water containing added sugar or sweetening matter or flavor	28 percent plus 12 percent cess
8415	Air-conditioners	28 percent
8418	Refrigerators, freezers, and other refrigerating	28 percent
	or freezing equipment
1905	Biscuits	18 percent
Chapter 61	Articles of apparel and clothing accessories, knitted or crocheted	–     5 percent if value not exceeding Rs 1000 per piece
		–     12 percent if value exceeds Rs 1000 per piece
Chapter 62	Articles of apparel and clothing accessories not  knitted or crocheted	–     5 percent if value not exceeding Rs 1000 per piece
		–     12 percent if value exceeds Rs 1000 per piece
Chapter 64	Footwear gaiters and the like parts of such articles	–     5 percent if retail sales price is not exceeding Rs 500 per pair
		–     18 percent for other categories of footwear
Chapter 42	Articles of leather, saddlery, and harness, travel goods, handbags and similar containers; articles of animal gut	–     28 percent
Chapter 71	Natural or cultured pearls, precious or semi- precious metals, metal clad with semi-precious metal and articles thereof, imitation jewelry, coin	–     3 percent

Automobiles:

HSN	Description of goods	Rate
87	Electrically operated vehicles, including 2/ 3 wheeled electric motor vehicles	12 percent
8703	Small Cars (length < 4 m ; Petrol < 1200 cc )	28 percent plus 1 percent cess
	Small Cars (length < 4 m ; Diesel < 1500 cc)	28 percent plus  3 percent cess
	Mid Segment Cars (engine < 1500 cc)	28 percent plus 15 percent cess
	Large cars (> 1500 cc)	28 percent plus 15 percent cess
	Sports Utility Vehicles (length > 4m ; engine > 1500 cc; ground clearance > 170 mm)	28 percent plus 15 percent cess
	Mid-Segment Hybrid Cars (engine < 1500 cc)	28 percent plus 15 percent cess
	Hybrid motor vehicles > 1500 cc	28 percent plus 15 percent cess
	Hydrogen vehicles based on fuel cell tech > 4m	28 percent plus 15 percent cess
8708	Parts and accessories of motor vehicles of headings 8701 to 8705	28 percent

Information Technology – Goods:

HSN	Description	Rate
8523	Shrink Wrapped software product (on media)	18 percent
8471	Laptops, desktops, peripherals, parts, etc	18 percent
8443	Printers (other than multifunction printers)	18 percent
8528	Monitors and projectors (capable of connecting to ADP)	28 percent
8517	Majority of Networking products	18 percent
8517	Imported mobile phones	12 percent
8517	Domestically manufactured mobile phones	12 percent

Information Technology – Services:

Description of service	Rate
Temporary transfer or permitting the use or enjoyment of any Intellectual Property	12 percent
Electronic supply of software	18 percent (residuary rate)
Software services, ie, development, design, programming, customization, adaptation, up-gradation, enhancement, implementation of information technology software	18 percent (residuary rate)
Ambiguity may arise with respect to taxability of electronic software and related services at 12 percent or 18 percent in absence of a specific entry in the rate schedule
IT services including consulting, implementation, advisory	18 percent

Real Estate – Goods:

HSN	Description of goods	Rate
Chapter 72	Steel	18 percent
2523	Cement	28 percent
6802	Marble and granite	28 percent
2515	Blocks of marble and granite	12 percent
Chapter 68	Sand lime bricks and fly ash bricks	12 percent
2505 & 2517	Natural sand, pebbles, gravel	5 percent
8428	Lifts and elevators	28 percent

Real Estate – Services:

Description of service	Input tax credit	Rate
Construction of a complex intended for sale to a buyer, wholly or partly, where value of land is included in the amount charged from customer	Full input tax credit allowed	12 percent
	However, in case there is an excess input flow, no refund to be allowed
Composite works contracts (relating to immovable property)	Full input tax credit allowed	18 percent

Energy:

HSN	Description of goods	Rate
2701	Coal	5 percent along plus cess at the rate of Rs 400 per ton
Chapter 84 and 85	Renewable energy devices such as solar power based devices, solar power generating system, windmills, the wind operated electricity generator	5 percent
	Spare parts for the manufacture of the aforementioned devices
8541	PV cells, modules, and panels	5 percent
8417	Industrial or laboratory furnaces and ovens, including incinerators, nonelectric	18 percent
8506	Primary cells and primary batteries	28 percent
9801	Project imports	18 percent

Hospitality:

Description of services	Credit eligibility	Rate
Tour operator services	Without credit	5 percent
Hotel accommodation
– Hotel where declared tariff is less than Rs 1000 per day or equivalent	–	Exempt
– Hotel having room tariff more than Rs 1000 and less than Rs 2500	With credit	12 percent
–  Hotel having room tariff more than Rs 2500 and less than Rs 5000	With credit	18 percent
– 5 star and above-rated hotel where room rent is more than Rs 5000 and above per night per person	With credit	28 percent
Restaurant services
– Restaurant with no AC and liquor license at any time during the year	With credit	12 percent
–  AC or having heating facility or having liquor license or both	With credit	18 percent
–  Restaurant services in 5 star or above-rated hotel	With credit	18 percent
Air travel booking agent services
–  Domestic bookings	With credit	18 percent on commission or 5 percent of basic fare
–  International bookings	With credit	18 percent on commission or 10 percent of basic fare

Transportation & Aviation:

Description of services	Credit eligibility	Rate
Transportation of passengers by air for economy class	With credit of only input services	5 percent
Transportation of passengers by air for other than economy class	With credit	12 percent
Transport of goods by air for outbound cargo	With credit	18 percent
Transport of goods by air for inbound cargo	Without credit	Exempted
Lease of aircraft to scheduled airlines for scheduled operations	With credit	5 percent
Passenger transport by road
–  Renting of motor cab	Without credit	5 percent
–  Renting of motor cab (If fuel cost is borne by the service recipient)	Not specified	18 percent
–   Transport of passengers, by
(i)  Air conditioned contract/stage carriage other than motorcab	Without credit	5 percent
(ii) Radio taxi	Without credit	5 percent

Special Category Goods/Services:

HSN	Description of goods	Rate
Chapter 7, Chapter 10, Chapter 3	Foodgrains, pulses, seafood including fish/shrimps, fresh fruits, and vegetables	Nil
Chapter 9, Chapter 17, Chapter 20	Sugar, coffee (other than instant coffee), tea and frozen fruits and vegetable	5 percent
Chapter 24	Tobacco leaves	5 percent on a reverse charge basis
Chapter 24	Other tobacco products	28 percent
		Cess rate may range from 71  percent to 204  percent
Chapter 24	Cigarettes and biris	28 percent
		Cess rate may vary from 5 percent + Rs.1591 per thousand units to 5 percent + Rs.4170 per thousand units

According to Finance Minister Arun Jaitley, GST will boost economic growth by as much as 2 percent. This will, in turn, reduce the budget deficit and help the government to allocate more funds for development projects.