GST impact: Mobiles, computers to become more expensive
- Author: Leroy Wright May 20, 2017,
May 20, 2017, 12:14
The GST Council discussed the tax rates for thousands of commodities which have to be grouped in seven categories of taxes - 0 per cent, 5 per cent, 12 per cent, 18 per cent, 28 per cent, special category and luxury items category.
The GST Council meeting, which ends today, will soon announce the tax rates for gold, footwear and biscuits.
For services, the GST Council finalised four tax rates that will apply to services including telecoms, insurance, hotels and restaurants. These items will be taxed at 5 per cent instead of 15 per cent.
"Those paying service tax will not be able to take benefit of input credit as petroleum is not in GST", he said. Only 19% of goods will be taxed above 18% and 81% of items to fall under below 18% GST rate slabs, he had said.
According to the Council, services like education and healthcare would continue to be exempted from the tax ambit. "This will increase the incidence of tax for customers from the existing 15 per cent to 18 per cent", said Gopal Balachandran, Chief Financial Officer, ICICI Lombard. "On many commodities, there is a reduction particularly because the cascading effect of tax is gone", the finance minister said.
A 12% tax is proposed to be levied on hotels with tariff between Rs 1,000-2,000 a night under the GST regime.
These include a rate of zero for essential items such as grains, 5 per cent for mass consumption items such as tea and 12 per cent for commonly used products such as processed foods.
The GST for hotels with tariff above Rs 5,000 will be 28 per cent.
The GST is a destination-based single tax on the supply of goods and services from the manufacturer to the consumer and is one indirect tax for the entire country.
While a range of other goods and services are kept under the 18 per cent slab along with financial transactions.
Most personal care products will be taxed at 28% except hair oil, soaps and toothpaste, whose tax rate is 18%.
With the roll out of the new Goods and Services Tax by the first of July this year heading towards becoming a reality, how this would affect the prices of everything and how much more or less would consumers have to pay has become the talk of the town. The GST council on Day 1 of the meet ruled that 55 items will invite cess.
Refrigerators and ACs will attract a levy of 28%, whereas the life-saving drugs will fall in the 5% tax slab.
As of May 4, eight states including Rajasthan, Telangana, Bihar, Madhya Pradesh, Haryana and Jharkhand have passed a state goods and services tax Act in their state assemblies.