Fixation of new rates under GST

The Goods and Services Tax (GST) Council has fixed the new rates under GST for the rollout of the new indirect tax regime from July 1, 2017.

The council has also decided to increase the deemed credit for transition stocks in case of items that attract GST rate of 18% or 28%. Accordingly, they will be able to carry over 60% of the tax credit. But for items that lie in the tax bracket of 5% or 12%, the deemed credit for transition stock will remain at 40%. This has addressed a major concern of the industries that manufacture automobiles, FMCG, white goods and aerated beverages. Invoice of items used in stocks along with proof of excise

However, invoice of items used in stocks along with proof of excise paid will be eligible for the entire amount of input tax credit, but such invoices aren’t actually available with most dealers.

Highlights of new rates under GST

Here are the highlights of new rates under GST regime which will be implemented from July 1, 2017.

  • Packaged food items sold under registered trademarks to be taxed at 5%
  • Agro Machinery fixed at 5%
  • Apparel below Rs. 1000 to be taxed at 5%
  • Nominal rate of 0.25% imposed on rough diamond
  • GST on all biscuits to be taxed at 18%
  • Readymade garments to be taxed at 12 %
  • Yarn and fabric cotton to be taxed at 5% in which natural yarn will be 5% and man-made yarn at 18%
  • Footwear below Rs. 500 will be taxed at 5% and that above Rs. 500 at 18 %
  • Gold jewellery will be taxed at 3%. Current rate is 2%
  • Bidi to be taxed at 28% without cess and Bidi leaves will be taxed at 18%. Current rate is 26-27%
  • Tax on jute will be 0%
  • FMCG products like Biscuits will be taxed at 18%. Presently the rate of biscuits is 20-23%

Summary of new rates under GST

ItemsCurrent rateGST
Packaged food0%5%
Biscuits20-23%18%
Agro machinery (i)9%5%
Agri machinery (ii)14%12%
Footwear
Cost less than Rs.500
Cost more than Rs.500

9.5%

23-30%

5%

18%

Cotton fibre /yarn5%5%
Man –made yarn17%18%
Fabric0%5%
Readymade garments
(costing up to Rs.1000)
(costing over Rs.1000)
7% 

5%

12%

Gold2%3%
Rough diamonds0%0.25%
Bidi26-27%28% without cess
Bidi leaves5-26%18%

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 Registration and GST Return Filing. You can also use our GST software for doing end-to-end GST compliance.