Srinagar: The Goods and Services Tax (GST) Council on Thursday decided the tax rates for 1,211 items, a majority kept at 18 percent, though the rates on gold and beedi remained undecided.
The products which are used on a daily basis such as foodgrains, hair oil, soaps and toothpaste as also electricity will cost less from July 1 when the GST is scheduled to be rolled out.
While the Council fitted all but six items in 5, 12, 18 or 28 percent tax brackets, cars will attract the top rate as also a cess in the range of 1 to 15 percent on top of it, reported PTI.
Small cars will be charged 1 percent cess on top of 28 percent tax, mid-sized and luxury cars will attract cess of 15 percent on top of the peak rate.
While meat, fresh vegetables, honey, jaggery, prasadam, kumkum, bindi, pappad and contraceptives have been exempt from GST levy, items like pizza bread, sevaiya, condensed milk, frozen vegetables will attract 5 percent levy, as per the items list put on CBEC website on Thursday.
Common use products like hair oil, soaps and toothpaste will be charged with a single national sales tax or GST of 18 per cent instead of present 22-24 per cent tax incidence through a combination of central and state government levies.
All capital goods and all industrial intermediaries would attract 18 per cent tax instead of 28 percent.
Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 percent, almost the same as current incidence.
While frozen meat will attract a GST of 12 percent, Ayurvedic or homoeopathy medicines, agarbatti, umbrella, electric vehicles and mobile phone manufacturing will be taxed at 12 percent.
The GST Council, which also finalised 7 set of rules for the new indirect tax regime on Thursday's meeting, will meet on Friday to finalise tax rates on service. Two set of rules on transition provision and returns have been referred to legal committee.
Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from the GST. Currently, some states levy Value Added Tax (VAT) on them.
"We have finalised tax rates for a majority of items as well as the exempt list (at today's meeting)," Jaitley told reporters here.
Out of the 1,211 items, the GST rate for all but six was decided on the first day, he said.
"Rates have been finalised for the rest," he said, adding GST for packaged food items is to be finalised later.
"(With) the standard rate items of 12.5 per cent and 15 per cent, plus the cascading effect of local taxes, the tax rate was going up to 30-31 percent. These 30-31 per cent taxes... have all been brought down to 28 percent.
"Of these, some are items to be used by common man soap, oil -- that has been brought down to 18 percent. So there will be a substantial reduction as far as those items are concerned. We have kept one criteria in mind that the overall impact is not inflation, in fact, it brings down the costs," Jaitley added.
Revenue Secretary Hasmukh Adhia said 7 percent of the items fall under the exempt list while 14 per cent have been put in the lowest tax bracket of 5 percent. Another 17 percent items are in 12 percent tax bracket, 43 percent in 18 percent tax slab and only 19 per cent of goods fall in the top tax bracket of 28 percent.
As many as 81 percent of the items will attract 18 percent or less GST.
Jaitley said there will be no inflationary impact as most of the rates which are at 31 percent have been brought down to 28 percent.
"Cereals will be in an exempt list. But what is to be done with packaged and branded food that has to be separately decided. We are yet to make a decision on that," he said.
Jaitley said the key feature of Thursday's rate decision has been that "tax rate under GST will not go up for any of the commodities. There is no increase. On many commodities, there is a reduction particularly because the cascading effect of tax is gone."
"Of several commodities, we have consciously brought down the tax. In the overall basket there would be a reduction, but we are banking on the hope that because of a more efficient system, evasion would be checked and tax buoyancy would go up. That despite reduction the revenue neutrality and tax buoyancy thereafter would be maintained," he added.
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