Tax rates have been finalized by the GST Council headed by Indian Finance Minister Arun Jaitley. All the proposed seven rules for the GST regime have been approved by the GST Council, which are slated to come in effect from July 1, 2017.
The proposed two rules of the GST relating to tax transition and return are under the scrutiny of the legal committee. The tax rates for 1211 items has been finalized by the GST Council. It has decided that 7% goods and services will be exempted from tax, 14% will fall in the 5% slab, 17% will fall in the 12% slab, 43% will fall in the 18% slab and 19% will fall in the 28% slab.
- 81% of the items from 1211 items will be taxed at 18% or less. Remaining 19% will attract a highest tax rate of 28%.
- Household items like Tea, Sugar, and Coffee and edible oil will attract a lower GST rate of 5%.
- Milk and cereals will be exempted from the tax.
- Daily-use items like toothpaste, hair oil, and soap will be taxed at 18%.
- Luxury cars will attract 28% GST, along with 15% cess.
- Manufactured goods will attract 18% levy.
- Diesel cars will attract 28% GST with a 3% cess, while small petrol cars will be taxed at 28% GST with a cess of 1%.
- Capital goods will be taxed at 28%.
- Tax incidence on coal has been decreased to 5% from 11%.
- Aerated drinks will be taxed at 28%.
The GST Council has reduced tax on many item, but has not increased tax on any of the 1211 items. Like daily-use items like toothpaste, soap, hair oil that were taxed at 28% will now be taxed at 18%. Food items are expected to be available at a discounted rate. The GST regime is expected to unify country into a common market by eliminating both State and Central levies.