Srinagar, May 18
Foodgrains will cost less from July 1 when the nationwide Goods and Service Tax (GST) is expected to be rolled out as the GST Council today decided to exempt the daily-use commodities from the levy.
Common use products like hair oil, soaps and toothpaste will be charged a single national sales tax or GST of 18 per cent instead of the present 22-24 per cent tax incidence through a combination of central and state government levies.
The GST rates for all but six items were finalised on day one of the two-day meeting here of the GST Council, headed by Union Finance Minister Arun Jaitley and comprising state representatives.
Milk and curd will continue to be exempt from taxation when the Goods and Service Tax (GST) replaces current indirect taxes. ‘Mithai’ or sweets will attract 5 per cent levy. Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 per cent, almost the same as current incidence.
Prices of foodgrains, especially wheat and rice, will come down as these will be exempt from GST. Currently, some states levy Value Added Tax (VAT) on them.
Aerated drinks and cars will be in 28 per cent bracket. On top of the peak rate, small cars will attract a 1 per cent cess, mid-sized cars will attract 3 per cent and luxury cars 15 per cent.
On gold, states demanded a 4 per cent tax even though the rate is not among the 5, 12, 18 and 28 per cent approved bands. ACs and refrigerators will fall in the 28 per cent tax slab while life-saving drugs have been kept at 5 per cent rate.
Jaitley said there will be no inflationary impact as most of the rates, which are at 31 per cent, have been brought down to 28 per cent.
Coal will attract GST of 5 per cent as against the current tax incidence of 11.69 per cent. “Cereals will be in exempt list. But what is to be done with packaged and branded food has to be separately decided,” he said.
Jaitley said the key feature of today’s rate decision has been that “tax rate under GST will not go up for any of the commodities”. “If any part does not conclude tomorrow, the council may decide a date to complete the discussion,” the Union Minister said.
Revenue Secretary Hasmukh Adhia said of the 1,211 items, 7 per cent will be exempted, 14 per cent will be in the 5 per cent slab, 17 per cent in the 12 per cent slab, 43 per cent in the 18 per cent bracket, while 19 per cent will go into the top slab of 28.
The GST is India’s biggest tax overhaul since Independence.