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June 27, 2017

GST Rate Structure


GST council has made the much-awaited announcements around tax rates on various categories of goods on day one of a two-day meeting of the said council at Srinagar. There has been a hype around these rates for a while and now these rates are finally in the public domain.

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As soon as the GST rates were announced a huge wave of curiosity hit across industry and trade bodies. Everyone is evaluating their position as a result of this change. So in this article, we bring you our analysis of these GST rates.
GST Tax Rate Structure
We already know that the GST slabs are pegged at 5%, 12%, 18% & 28%. According to the latest news from the GST council, the tax structure for common-use goods are as under:
GST Rates Structure
Tax Rates Products
5% Edible oil, sugar, spices, tea, coffee (except instant)
Coal (instead of current 11.69%)
Mishti/Mithai (Indian Sweets)
Life-saving drugs
12% Computers, Processed food
18% Hair oil, toothpaste and soaps (currently at 28%)
Capital goods and industrial intermediaries (big boost to local industries)
28% Small cars (+1% or 3% cess)
Consumer durables such as AC and fridge
Luxury & sin items like BMWs, cigarettes and aerated drinks (+15% cess)
High-end motorcycles (+15% cess)
Beedis are NOT included here
    In addition to the above, a few other items were mentioned in the Council’s announcement of rates. These items, and the applicable rates on them are as follows:
  • Sugar, Tea, Coffee and Edible oil will fall under the 5 per cent slab, while cereals, milk will be part of the exempt list under GST. This is to ensure that basic goods are available at affordable prices. However, instant food has been kept outside this bracket so, no relief for Maggie lovers!
  • The Council has set the rate for capital goods and industrial intermediate items at 18 per cent. This will positively impact domestic manufacturers as seamless input credit will be available for all capital goods. Indeed, it is time for “Make In India”.
  • Coal to be taxed at 5 percent against current 11.69 per cent. This will prove beneficial for the power sector and heavy industries which rely on coal supply. This will also help curb inflation. Expect a good run for Coal India tomorrow.
  • Toothpaste, hair oil, and soaps will all be taxed at 18 percent, where currently they are taxed at 28 percent. Most of the cosmetics and fast moving consumer goods (FMCG) brands should get the benefit of this tax reduction. After all, Fair and Lovely might seem fairer in its pricing from now on!
  • The ‘mithai’ from the neighbouring sweet shop might lose some of its flavour as Indian sweets will now be taxable at 5 per cent. If you have a sweet tooth, this could hurt your pocket a wee bit in the coming days.
Plus, it was announced that:
  • for restaurants serving alcohol, the tax bracket will be 18 per cent
  • education, healthcare are going to be exempted from GST
  • services on Non-AC restaurants will be 12 per cent
If you want to know more about the announced rates, please click on the following links. The following files will be downloaded to your computer, and they contain a complete chapter-wise list of the applicable GST rates on goods and services.
Download Complete Chapter Wise List of GST Rates for Services
Download Complete Chapter Wise List of GST Rates for Goods
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