Goods and Services Tax (GST) is a system of taxation in India, which will merge many individually applied taxes into a single tax. The Goods and Services Tax Council today (May 19) announced the finalised tax rates for goods and services, from which healthcare and education have been exempted. The government aims to roll out the implementation of GST from July 1, 2017.
Finance Minister Arun Jaitley in Srinagar said, “India has finalised four tax rates that will apply to services including telecoms, insurance, hotels and restaurants under a new sales tax which should be rolled out on July 1.”
The tax rates for goods would fall under the slabs: 5, 12, 18 and 28%. While telecoms and financial services would be taxed at a standard rate of 18%, transport services would be taxed under 5% slab.
No tax would be imposed for:
No tax will be imposed on items like stamps, judicial papers, printed books, newspapers, bangles, sindoor, bindi, handloom fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, etc.
No tax would be imposed on hotels and lodges below Rs 1000 tariff.
5% tax slab would be imposed on:
Products such as coffee, tea, spices, pizza bread, rusk, sabudana, fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, kerosene, coal, medicines, stent, lifeboats would fall under 5% tax.
Transport services (railways, road and air transport) and small restaurants will be fall under the 5% tax slab.
12% tax slab would be imposed on:
Frozen meat products, butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, namkeen, Ayurvedic medicines, tooth powder, agarbatti, umbrella, sewing machine, cellphones, etc.
Services that would fall under 12% slab are business class tickets, fertilisers, non-ac hotels, etc.
18% tax slab would be imposed on:
Pasta, ice cream, instant food mixes, mineral water, tissues, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, envelopes, sanitary napkins, steel products, printed circuits, camera, speakers and monitors.
AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST, which includes hotels with tariff between Rs 2500 to Rs 5000.
28% tax slab would be imposed on:
Hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, chewing gum, molasses, paint, deodorants, shaving creams, after shave, shavers, hair clippers, automobiles, motorcycles, aircraft, etc.
These services include 5-star hotels, race club betting, cinema, etc and hotel tariffs above Rs 5000.