GST is the biggest tax-related reform in the country bringing uniformity in the taxation structure and eliminating the cascading of taxes that was levied in the past. The GST Council meets from time to time to revise the GST rates for various products. Several states and industries recommend reduction in GST tax rate for various items which are discussed in these meetings.
GST stands for Goods and Services Tax. It is classified into three types:
The table given below shows GST tax rate on some common items-
|5%||Household necessities such as edible oil, sugar, spices, tea, and coffee (except instant) are included. Coal , Mishti/Mithai (Indian Sweets) and Life-saving drugs are also covered under this GST slab|
|12%||This includes computers and processed food|
|18%||Hair oil, toothpaste and soaps, capital goods and industrial
intermediaries are covered in this slab
|28%||Luxury items such as small cars , consumer durables like AC and Refrigerators, premium cars, cigarettes and aerated drinks , High-end motorcycles are included here.|
Though edible items like sugar, tea and coffee are included in the 5% slab, milk does not attract any tax under the new GST regime. The idea behind this is to ensure that basic food items are available for everyone but instant food is kept out of this category.
The government has proposed a 4-tier tax structure for all goods and services under the slabs- 5%, 12%, 18% and 28%. After the recent revision of GST rates, these are the commodities that fall under the four tax slabs along with those that do not attract any tax. Please note that only those commodities are included in this list whose rates have been revised in various council meetings.
Let us have a look at various products and the tax slab in which they fall into :
Apart from other items that enjoy zero GST tax rate, these are the commodities added to the list after 11th June rate revision -
5% Tax Slab
Given below are the items that have been added to the 5% GST tax rate slab along with the other existing items-
12% Tax Slab
After the GST council meeting on 11th June, the following items were added to the 12% GST rates category-
18% Tax Slab
The items mentioned below have been added to the 18% GST tax rate slab among the other existing items-
28% Tax Slab
The council meeting was held to 'reduce' the tax rates on certain items based on customer preferences. Hence, no additional items were added to the highest GST rates slab of 28%.
Government has also impose GST on Services with the same 4-tier tax structure as of goods. GST rates on services comprising of 5%, 12%, 18% and 28% comes with various pros and cons for the consumers. However, government has exempted healthcare and educational services from the purview of the GST.
The Goods and Services Tax council has passed the rate slabs at NIL, 5%, 12%, 18%, 28%. Some of the services categorized under different slabs are mentioned below :
5% Tax Slab
12% Tax Slab
18% Tax Slab
28% Tax Slab
Earlier Service Tax was levied on Loans which has now been replaced by GST which would now be levied on loans. The rate of Service Tax was 15% whereas the rate of GST is 18%. A lot of people are of the opinion that the effective cost of having a loan would increase as the rate of GST is 3% higher than the rate of Service Tax. Several people are of the opinion that their EMI's would increase as the rate has been increased by 3%. However, this is not the case as GST is not levied on repayment of loan or on payment of Interest on Loan.
GST is only levied on the processing charges and any other charges paid to the bank excluding the principal repayment and interest payment. These other charges include the Loan Processing Fees, Loan Prepayment Charges and other charges, if any. As a major chunk of the loan repayment comprises of principal repayment and interest payment, the impact of GST on Loans would be very negligible. The impact of GST on Home Loans and Personal Loans has been explained below for a much better understanding of the impact.
Mentioned below are the important loans and their GST rates:
(a) Personal Loan- 18%
(b) Home Loans- 18%
(c) Car Loan- 18%
The Government is going on with some new tactics to bring in some of the products under GST system. As hinted by Finance Minister, Arun Jaitley, there could be an inclusion of products under GST with the reduction of GST rates on some products. Major products which can come under GST rates slab includes :
Till date, there has been 27 successful GST council meeting in which council has recommended various relief measures regarding GST rates on goods and services. GST Council Meeting is chaired by the Finance Minister who gives clarification and recommendation regarding various changes made in the GST rates of the goods and services.
Some of the important GST council meeting held till date are mentioned below :
(a) 28th GST Council Meeting: The 28th GST meeting held at New Delhi on 21st July, 2018 witnessed major changes in the GST rates in the country. The government has focused on changes made in GST rates on various goods and services and also has simplified the GST return filing mechanism.
Some of the major changes initiated in the meeting includes-
The council has brought down the tax rates to 18% from 28% on 15 items including vaccum cleaners, washing machine, TV, paints and others. Sanitary napkins, Stone/marble, raw materials for jhadoo and others have got their rates reduced to 0% i.e. exempted from GST. Now only 35 goods are in 28% bracket. This rates will be implemented from 27th July.
(b) 27th GST Council Meeting: The Finance Minister Arun Jaitley chaired the 27th GST Council Meeting on Thursday, 18th Jan, 2018 where certain changes and recommendations were made through a video conference in New Delhi. In this meeting, various provisions were made for B2B dealers, GSTR 3B and GSTR 1 filing to be continued same. Furthermore, council also decided to look into the matter of cess in sugar as well as digital transactions.
(c) 26th GST Council Meeting: This GST meeting was held at Vigyan Bhawan, New Delhi on 10th Mar, 2018. GST council primarily focused on exports, interstates movement of goods, filing returns and others. The main agenda of the meeting was E-Way Bill, Simple Return Filings, GSTR 3B deadline extension, Composition Scheme.
(d) 25th GST Council Meeting: On 18th Jan, 2018 GST council meeting was held at Vigyan Bhawan, New Delhi. It focused on building some anti-evasion measures on GST. Some items were re-considered under 18% slab rate from 28% slab rate.
(e) 24th GST Council Meeting: The twenty-fourth meeting of GST Council was held on 16th Dec, 2017 through video conference. Agenda of the discussion was introduction of e-Way Bill System by the given deadline, refund of provisionally accepted input tax credit.
(f) 23rd GST Council Meeting: 10th Nov, 2017 witnessed the 23rd GST council meeting in Guwahati, Assam. This meeting focused on analysis of revenue, modification on rules of Anti- Profiteering and GST Rates on certain items coming under 28% slab rates.
(g) 22nd GST Council Meeting: The 22nd council meeting decided that AC restaurant tax rate revised to 12% from 18%. Major changes in the GST rates, businesses with turnover up to INR 1.5 crore allowed to file quarterly returns, No GST on advances received by SMEs were the key aspects discussed at GST council meet.
(h) 21st GST Council Meeting: The 21st meeting was inaugrated in Hyderabad on 9th Sep, 2017. Council decided major changes in the tax rates from 18% to 12%. Also, due dates of filing GSTR-1, GSTR-2, GSTR-3 were extended.
(i) 1st and 2nd GST Council Meeting: The first meeting of GST council was held on 22-23 Sep, 2016. It focused on rolling out GST on 1st Arril, 2017. It decided the regulation under composition scheme and GST rates and threshold limit to pay taxes. The second meeting was held on 30th Sep, 2016. GST drafted rules for registration, payment process, returns, invoices and other issues for the taxpayers.
As GST has transformed the economy at its peak. It's a game-changing reform for the Indian economy as it brings about net appropriate price for the goods and services considered under single taxation system. Mentioned below are some of the important GST rates impacts in the Indian economy :
With the implementation of GST, various traders, cloth merchants, private security agencies and many others went on protest against GST rates. Cloth merchants protested against the imposition of 5% sales tax on textiles under the GST regime. The newly added tax system in the country also made the iron, wire dying and steel traders to held a protest against high rates of GST. Steel traders were of opinion that the new tax system has nosedived 40% trade due to high rates and elaborated paper works under the new system.
Owners and employees of private security agencies also went on a silent protest against the levy of 18% GST on security services because the GST rate took away the major share of wage and benefits from the security personnel.
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