GST will take three months to stabilise industries: Crisil

The all-powerful council has also exempted some products such as food grains, fresh vegetables, meat, contraceptive as well as services like education and healthcare have also been kept tax free.

Luxury items: On gold, states demanded a 4 per cent tax even though the rate is not among the 5, 12, 18 and 28 per cent approved bands.

"The rates are as per the expectations of the industry and nearly all segments of the industry have benefitted by way of a reduced overall tax burden in varying degree, which will pave the way for stimulating demand and strengthening the automotive market in the country, paving the way for meeting the vision laid down in the Automotive Mission Plan 2016-26", said Dasari. Diners in restaurants located in five-star hotels will, however, have to pay a 28 per cent tax. These items will be taxed at 5 per cent instead of 15 per cent.

Popular cab services like Ola and Uber would also get cheaper as they would move from the current 6 per cent to 5 per cent tax slab.

The Goods and Services Tax Council, the apex body to fix tax rates under the new indirect tax regime, today finalised the tax rates for services under the GST, which is scheduled to be rolled out from 1 July. However, hotels with tariff under Rs 1,000 are exempt from the GST regime. These are usually five-star hotels that would attract a tax rate of 28%. These 30-31 per cent taxes. "This will not have a significant inflationary impact but services would determine the overall impact on inflation", she said.

In line with this principle, the council chose to exempt non-AC train travel but charge 5 per cent on tickets for travel in AC compartments. Five star and luxury hotels will be taxed at 28%.

It was expected that the Council will also finalise tax rates for gold, gold jewellery itself but it has put the decision on hold till its next meeting scheduled in June this year. There would be no tax on room tariff of less than Rs 1,000.

Non-AC train travel, including on local trains and metro, as well as religious travel, including Haj yatra, will remain exempt from GST. The ministers still need to decide on packed and branded food items, Jaitley said.

Several analysts have opined that consumers may have to bear the brunt of the higher tax.

Out of the 1,211 items, the GST rate for all but six was decided on the first day, he said.

"On many commodities there would be reduction because of the cascading effect, but we are banking on the hope that because of a better tax system and less evasion there would be tax buoyancy", he said.

India will emerge as the third largest economy eliminating state and central taxes and combining them into a single tax through GST.

As many as 81 per cent of the items will attract 18 per cent or less GST.

  • Zachary Reyes