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 | 28 percent plus 1 percent cess |
| Small Cars (length | 28 percent plus 3 percent cess | |
| Mid Segment Cars (engine | 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 | 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.