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gst rates revised

GST rates revised for 66 items when the  GST Council met on 11th June 2017 (Sunday).

There have been countless recommendations from states and industries to reduce the rates on certain items. Finance Minister Arun Jaitley said that the rates were revised because the main idea behind GST rates was to maintain the rates as close to the original taxes. In some cases, this was not occurring. In some items, the reduction was required because of the changing nature of the economy and changes in consumer preference.

These items were earlier placed under high rates of GST (18-28%). On studying the list, it can be found that these items are necessities and not luxuries and so the GST council has reduced the tax rate on these essential items. For example, items like spectacles, exercise books and note books are a part of everyday life and cannot be placed in the highest tax bracket of 28% along with cars and cigarettes.

Composition Scheme

Composition scheme threshold has also been increased to 75 lakhs from 50 lakhs. Now, more businesses can opt for composition scheme and enjoy reduced taxes and lesser compliance. However, it is still not applicable for service providers. There is no clarification yet on whether the increased turnover limit for Composition levy will also apply in case of Special Category States.

gst rates revised

GST Rates Revised for Certain Items

Item Earlier GST rate New GST rate Impact
Food items      
Cashew nut 12% 5%
Cashew nut in shell 12% 5%(Reverse charge)
Preparations of vegetables, fruits, etc. such as pickle, murabba, chutney, jam, jelly 18%/12% 12% Jams and pickles are a part of staple diet of the masses and certainly not a luxury
Ketchup & sauces including mustard sauces 18% 12% Ketchups and mustard sauces are a part of everyday food and cannot be treated as a luxury
Curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasonings

(Fancier sauces)

18% 12%
Ice and snow 12% 5%
Salt, all types 5% 0% Common salt is not excisable goods.However, GST does not subsume Salt Cess (14 paise per 40 kgs of salt produced)

However, GST does not subsume Salt Cess (14 paise per 40 kgs of salt produced)

Fuel
Bio gas 12% 5% Bio gas is an important source of alternative fuel especially in the villages
Children
Exercise books and notebooks 18% 12%
Children’s’ picture, drawing or colouring books 12% Nil
Paper punchers, Staplers, Pencil sharpeners 28% 18%
Kites 12% 5%
Baby carriages 28% 18%
Playing cards, board games such as chess, carom ludo, etc.

[other than video game consoles and machines]

28% 12% These are the games for masses and cannot be considered as luxury items (like play stations)
Swimming pools and paddling pools 28% 18%
Entertainment
Movie tickets costing below Rs. 100

 

28% 18% with

Full ITC

This will not affect moviegoers in big cities who watch movies in multiplexes
 Medical items
Glasses for corrective spectacles and flint buttons 18% 12% Spectacles and artificial lenses are a necessity for many with poor vision and suffering from eye problems
Intraocular lens (replace the eye’s natural lens when it is removed during cataract surgery) 28% 12%
Spectacles, corrective 18% 12%
Insulin 12% 5% This is an essential drug for diabetic patients and now taxed at 5% along with other life-saving drugs
Dental wax 28% 18%
All diagnostic kits and reagents 18% 12% Rates have been reduced as these are essential for medical treatments.
House & kitchen
Kajal [other than kajal pencil sticks] 28% Nil Kajal has been made 0 rated like Kumkum & alta
Kajal pencil sticks 28% 18%
Agarbatti 12% 5% Taxes have been lowered to put them almost at par with puja samagri (0%)
Plastic beads 28% 12%
Plastic Tarpaulin 28% 18%
Bags-

  • School satchels and bags (not leather or composition leather)
  • Toilet cases
  • Hand bags and shopping bags (excluding wicker work or basket work)
  • Vanity bags
28% 18%
Cutlery (Spoons, forks, ladles) 18% 12%
Aluminum foil 28% 18%
Bamboo furniture 28% 18%
Coir mats, matting and floor covering 12% 5%
  • Muddhas made of sarkanda (stools)
  • Phool bahari jhadoo (brooms)
5% 0%
Computers and electronics
Printers [other than multifunction printers] 28% 18%
Set top Box for TV 28% 18%
Computer monitors not exceeding 17 inches 28% 18%
CCTV 28% 18% GST rate has been reduced as it is now an essential item to protect security of citizens
Static Convertors (UPS) 28% 18%
Other items
Postage or revenue stamps, stamp-post marks, first-day covers, etc. 12% 5%
Headgear and parts thereof 28% 18% Rates are reduced to bring down prices of many headgear especially protective helmets
Rough precious and semi-precious stones 3% 0.25% Rates on these items have been reduced

GST Rates Revised for Industry and Machine Items

Item Earlier GST rate New GST rate Impact
Job Work

  • Textile yarns & textile fabrics (not artificial fabrics)
  • Jewelry making (gold and other precious metal jewelry whether plain or with diamonds, precious and semi-precious stones)
  • Printing books (including braille books), newspapers, magazines- remains unchanged
  • Processing leather
18% with Full ITC 5% with Full ITC Based on industry demand, GST Council decided to lower the levy on jobwork for these industries from 18% to 5%.

This is good news for those involved as it will reduce the tax burden. However, printing of newspapers remain unchanged at 5% GST.

Industry items and machine parts
Fly ash blocks 28% 12%
Pre-cast concrete pipes 28% 18%
Salt glazed stone ware pipes 28% 18%
Fixed speed diesel engines 28% 12%
Weighing machinery[not electric or electronic weighing machinery] 28% 18%
Ball bearing, roller bearings, parts & related accessories 28% 18% These are essential parts of most machines and cannot be classified as luxury items.
Transformers industrial electronics & electrical transformer 28% 18%
Two-way radio (Walkie-talkie) used by defence, police and paramilitary forces etc. 28% 12% These are mainly used by security forces
Tractor components 28% 18%
Electrical filaments or discharge lamps 28% 18%
Winding wires 28% 18%
Coaxial cables 28% 18%
Optical fiber 28% 18% Used mainly in providing high speed internet
Instruments for measuring length by hand (measuring rods and tapes) 28% 18% Measuring tapes are used in the textile and garment making industry which is a major chunk of India’s economy

The full list of the items with revised GST rates is available on CBEC website.

The Council will meet on June 18 to discuss lottery taxes and the e-way bill.

For more questions on GST rates analysis, please visit ClearTax.

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