Tax Rates Before and After GST

By Registrationwala

10th June 2017


The Goods and Services Tax (GST) bill has been one of the most prominent economic moves in the country that has the potential to impact the economy in an unprecedented manner. While this system of taxing has been in place, successfully, in some of the major developing countries of the world, India’s tryst with this experiment is closely followed at in the economic fraternity of the world.

Before we do justice to the title of the post and make you aware about the tax rates for various products, let’s just jog the memory a bit.

GST was in the pipeline for close to years, before the law makers of this country realized that it was time to roll out the dice. The bill got through the Lok Sabha test easily because the centre government had a thumping presence in the lower house. However, things were a little difficult in the upper house. The government did not have the requisite numbers to clear the test so a lot of convincing was required before the Rajya Sabha too gave it consent for the bill to be framed into a law. A law at the core of which lay the idea of transforming a potent economy and the lives it catered to. After a lot of contemplation that lasted a few meetings and days, the government decided to finalize four tax slabs – 5, 12, 18 and 22 percent – for various products and services. Most of the goods and services for the common usage of ‘masses’ have been put under the 18 percent slab. Then there are certain services which have been termed sinful products, products of indulgence and hence will be taxed at 28 percent. On the whole, the government has categorised 1211 items under various tax slabs.

From a rough glance what we notice is that while prices of some of the daily use goods like sugar, tea and hair oil have come down, there will be a gradual increase in the prices of luxury and sin products. One of the major blows has been dealt to eating out. Food bills at a five star hotel would be taxed at 28 percent from now onwards. In fact, lifestyle products too will become a touch more expensive than what they are right now.

However, the essentials will have a pleasing effect. Most of the items of daily usage will become. Household items like sugar, tea, coffee will fall in the category of processed foods and thus placed in the slab of 5 percent tax. GST has been a little soft on cereal consumption. Currently this commodity is taxed at 5 percent but will be exempted from any tax once GST is implemented.

Products like tooth paste, hair oils and soaps will be taxed at18 per cent instead of 28 per cent. Durable products like air conditioners, refrigerators, furniture, wristwatches and exercise equipment, which used to be taxed at 26 percent, will now attract a tax of 28 percent.

However, another commodity that definitely categorizes has indulgence has been kept away from the purview of the sinful category: jewelleries, Gold and rough diamonds attract a tax of 3% and 0.25% respectively.

While there are certain products that won’t be taxed at all. These items are: Jute, fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, etc.

One of the services that will be exempted from GST are hotels and lodges with tariff below Rs 1,000

Goods and services
Items such as fish fillet, Apparels that cost below Rs 1000, packaged food items, footwears below Rs 500, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will attract tax of 5 %. While transport services (Railways, air transport), small restaurants will be under the 5% category.

12 percent
Apparels that are above Rs 1000, frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, cellphoneswill come under 12 percent slab.
Non-AC hotels, business class air ticket, fertilisers, Work Contracts will fall under the 12 percent GST tax slab

Footwears costing more than Rs 500, Bidi Patta, All biscuits, flavoured or refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors will be taxed at 18 percent. As far as the services are concerned: AC hotels serving alcohol, telecom services, IT services, branded garments and financial services will come under the 18 percent tax slab.

Bidis, chewing gum, molasses, chocolate without cocoa, chocloate coated wafer and waffles, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use will all be taxed at 28 percent.



Tax Rates Before and After GST