It’s only less than a month left until Goods and Service Tax (GST) sees the light of the day. India’s biggest tax overhaul crossed its final hurdle last week when GST Council agreed tax rate for gold and silver jewellery at 3%. Here is a summary of the GST tax rate and their impact on Indian Consumers.
List of gains and losses due to GST Tax rate
|Gold: GST Council has fixed the tax rate of the precious metal at 3%. GST Council on June 3 created a new tax bracket for gold, diamonds, and silver. The current excise duty on gold was 1% and 1% VAT in many states. With 3% GST, Gold is set to become costlier July onward.|
|Insurance: Premiums are set to rise on car, health & term insurance with the government. Currently, insurance is taxed at 15%. Under GST tax rate, this would go up to 18%.|
|Banking Charges: Transaction fee on various banking and financial services are expected to go up as goods & service tax will tax these services under 18% tax rate from the current 15%.|
|Hotel Bookings: GST on hotel services will depending on the kind of room you stay in. If the room tariff is less than Rs 1,000, your stay will be tax-free. However, if the room tariff is between Rs 1,000 – Rs 2,500, you’ll be taxed 12%. If the tariff is between Rs 2,500 to Rs 7,500, the stay will be taxed 18%. For luxury hotels, where the tariffs are more than Rs 7,500, GST tax rate of 28% will be applicable.|
|Restaurant: There are different tax slabs for restaurants depending on their turnover and whether they have air-conditioning or or not.
Restaurants with a turnover of less than Rs 50 lakh will be levied a tax rate of 5%. Non-AC restaurants will be charged 12% Goods & Service tax on food bill. Tax rate for AC restaurants and those with the liquor license will be 18%, whereas restaurants in 5-star hotels will attract a GST rate of 28%.
|Telecom Bills: Your mobile and internet bills are expected to rise once GST comes into force. Currently, there is a 15% service tax on telecoms services. Under GST, the tax rate applicable will be 18%. The industry, which is already stressed with the launch of Reliance Jio, is expected to pass on these charges to customers.|
|Movie Tickets: During a GST Council meet in Srinagar, Finance Minister Arun Jaitley had said movie tickets in cinema halls will be taxed at 28%.
The movie tickets below Rs 100 will be taxed at 18%
|Medicines: While there may not be a huge impact of GST on medicines, but a tax rate of 5% on life-saving drugs that treat diseases like malaria, HIV-AIDS, tuberculosis, and diabetes is expected to marginally increase prices of these drugs.
Until now, these drugs were exempted from excise and customs duties. However, a few states were charging 5% on these drugs which will now be subsumed under it. Under GST, there will be a 12% on formulations and 18% on APIs (active pharmaceutical ingredients) – the bulk drugs that go into the making of final pills and tablets.
|Cab rides: Cab fares could get marginally cheaper for customers from July 1 as the incidence of tax will come down to 5% for bookings made on cab aggregators like Ola and Uber. Currently, a tax of 6% is levied on rides booked through cab aggregators.|
• Filter and non-filter cigarettes not exceeding 65 mm will attract cess of 5% plus Rs 1,591 per 1000 sticks.
• Cigars, levy of 21% or Rs 4,170 per 1000 sticks, whichever is higher.
• Branded gutkha will be slapped with a cess of 72%
• Smoking mixtures for pipes and cigarettes will attract a levy of 290%.
|Bikes: Motorcycles of more than 350 cc engine capacity will attract a total of 31% tax rate under the GST regime, same as the tax incidence on private aircraft and luxury yachts.|
• All cars fall in the ‘luxury bracket‘ of GST. That means they will attract 28% tax. However, depending on their size, extra cess will be levied.
• Small cars or cars under 4 metre length powered by a petrol engine not greater than 1.2-litre or a diesel engine not greater than 1.5-litre by displacement will be taxed at 28%. For petrol cars, the effective tax rate will be 29%. However, for diesel cars, the effective tax rate will be 31%.
• For mid-size, luxury cars and SUVs, the effective tax rate will be 43%. The prices of SUVs are expected to come down as they are currently taxed at 48-55%.
• The government said it would tax hybrid vehicles at a rate as high as 43%. This would be significantly higher than the prevailing tax of about 29% on such cars.
|Air Travel: Economy class air travel will become cheaper with tax rate fixed at 5% against the existing 6%, under the upcoming goods and services tax (GST) regime from 1 July. However, for those traveling business class, tickets will become dearer as the tax will go up from 9% to 12%.|
|No Tax Items:
GST Council has decided to keep the following tax-free
• Daily items like milk, paneer, and curd
• Metro travel, religious travel and Haj yatra
• Healthcare and Education
• Basic food items like cereals, eggs.
• Food grains, especially wheat and rice, However, packaged food items will be taxed at 5%.
|Coal: Electricity generation will get cheaper as the GST council has brought down the tax on coal to 5% from the current tax rate of 11.69%.|
|Daily use items:
Sugar, tea, coffee and edible oil will attract the lowest tax rate of 5%, almost the same as under the current tax structure.
Products like hair oil, soaps and toothpaste will be charged 18% instead of present 22-24.
The highest slab of 28% under GST
• Chewing gums, white chocolate, chocolates containing cocoa, wafers coated with chocolate, instant coffee, custard powder.
• Students’ colours, paints, varnishes, perfumes, beauty products, sunscreen, shampoos, hair dyes, after-shave lotions and deodorants.
|Meat: Animal slaughtering and services provided by veterinary clinics will be exempt from GST.|
|Entertainment: Visits to theme parks and sporting events like IPL will attract a levy of 28% under the new indirect tax regime kicking in from July 1.|
|Railways: Non AC train travel, including in local trains and metro, has been exempt from GST, while AC train travel will attract 5% service tax. Ticket prices for AC trains will increase marginally as current service tax is at 4.5%.|
|Maintenance Charges: Flat owners who pay Rs 5,000 or more every month as maintenance charges, excluding property tax, stamp duty, and utility charges, will have to pay GST on the increased tax rates. As of now, the tax levied is levied at 15.55% on maintenance charges, which will be replaced with 18% after GST is implemented.|
|Smartphones: A smartphone currently attracts 2% central excise duty, besides the value-added tax (VAT), which vary from state to state (5% to 15%). Under GST, smartphones will be taxed at flat 12%.|
|Cement: Prices of packaged cement is expected to come down marginally as it would be taxed at 28% under the GST as against 31% currently on account of different indirect taxes.|
|Ayurveda: Ayurvedic products are set to get costlier as the government has kept these products in the 12% bracket. Ayurveda products currently attract 8-9% tax.|
|Lottery: State run lotteries will be taxed at 12% of the face value and state authorised lotteries at 28%.|
In case you are confused about GST as a business owner, feel free to consult the GST experts at LegalRaasta. You can get comprehensive assistance on GST application online and GST Return Filing. You can also use our GST software for doing end-to-end GST compliance.