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Here’s the GST Zero rated list : Know what is cheaper

Here’s the GST Zero rated list : Know what is cheaper

GST Zero rated list : The high power GST council chaired by Finance Minister Arun Jaitley agreed on a four-tier tax structure of 5%, 12%, 18% and 28% that will be effective from April 1, 2017.

While the lowest rate has been fixed at 5% for items of common use, luxury and de-merits goods would attract an additional cess over and above the highest tax rates. Luxury cars, tobacco, and aerated drinks also fall in the top category.  The additional cess will, however, be lap sable after 5 years.

the GST Zero rated list

the GST Zero rated list

Here’s the GST Zero rated list : Know what is cheaper

GST Zero rated list

Consumers
GST tax rate slab

GST Zero rated list

“We have been able to finalize the GST rate structure. Zero tax rate will apply to 50% of the items in the CPI basket, said Jaitley on first day of the GST Council meet that spans two days. In order to keep inflation in control, several essential items such as food that currently constitute half of the consumer inflation basket will be taxed at zero rate.

Salt, bread, fresh fruit and vegetables, eggs, milk, curd, blood (yes blood, the human kind), prasad (the sacred kind), the national flag, kumkum, bindi-sindoor, glass bangles, even contraceptives — all these will continue to enjoy a taxfree run under the proposed goods and services tax (GST) regime.

A few essential services will also escape the levy under the new regime that the government wants to roll out from April next year. All the same, the list of exempted items that will be thrashed out by state and central government officials shortly after the rate structure is finalized will be getting shorter.

“The exemption list is to be pruned,” said a government official outlining the broad principle that will be followed in deciding what doesn’t get taxed under GST. But “those items that are exempted under value added tax will likely remain out of the tax net.”

This includes the items listed above. The exemptions are aimed at making sure that the common man isn’t subjected to tax shock. Shortening the list will ensure that the tax base is broadened.

“The list of exempted items cannot be very long but those that are considered of common essential use would be kept out,” the official said, adding that some of the services of this nature would also be included.

Exempted items won’t however be eligible for input tax credit. Many sectors, therefore, want to be included in the GST net but zero-rated, which means they’ll be eligible for input tax credit but untaxed.

Recommended Read : GST Tax Slab Rates : Council fixes 4-level GST rate structure

GST Zero rated list

GST Zero rated list

“Zero rating of necessities is surely a welcome news, though the actual benefit to consumer will depend on the items included in this category,” said Rajeev Dimri, Leader, Indirect Tax at consulting form BMR & Associates. Lower rate of 5% for items of mass consumption along with zero rated tax structure for essential commodities would make GST less regressive and pocket friendly for common man, he added.
As per Jaitley, about Rs 50,000 crore would be required in the first year to compensate for any loss of the revenue from roll out of GST. For this matter, a revenue pool will be created from the collections from the additional cess.

GST Zero rated list

GST Zero rated list

For Consumers
Even as the lists are yet to be rolled out by the GST Council, there may be good news round the corner for consumers. “Tax costs might even go down for commodities to be taxed at 5 per cent provided the credits on procurement are fully allowed,” said Dimri.
However, the government would need to ensure that multiple rates proposed for goods and services do not inherit the legacy issues around classification anomalies, said Krishna Arora, Partner, Grant Thornton India.
There has been a slight modification to the GST slabs when compared to earlier discussions where they were fixed at 6%, 12%, 18% and 26%.

Recommended Read : GST Tax Rate Structure : Rates fixed at 5%, 12%, 18%, 28%

Here are the five features of the GST tax rate slab

#The lowest rate of 5 per cent would be for common use items while there would be two standard rates of 12 and 18 per cent under the GST regime, targeted to be rolled out from April 1, 2017.

#Highest tax slab will be applicable to items which are currently taxed at 30-31 per cent (excise duty plus VAT).

#Tobacco will fetch 28 percent sin tax, excluding cess. Aerated drinks will also fetch tax at the same rate. Most white goods to be taxed at 28 percent but with riders.

Also Read: GST a win-win deal for both Indian industry and aam aadmi

GST Zero rated list

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