GST Rates: While businesses are bracing for transition from multiple tax systems to the ‘One Nation, One Tax’ under the new Goods and Services Tax (GST) regime, consumers have only one thing on their mind – what will get cheaper and what will cost more after July 1. The warning by the government to pass on the benefits from lower tax rate to consumers has also come as a good news for consumers. The GST Council has bracketed all the goods and services in the country in five categories – 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent. While some of these products had higher effective tax rates before the GST and the new tax regime will reduce the burden on consumers, some of the items will now be taxed at higher rate.
The government has imposed the tax rates in a way that essential services and food items remain in the lower tax bracket and luxury services and products attract higher tax. A total of 81 per cent of all the goods and services fall below or in 18 per cent tax slab. While 7 per cent of the items come under the exempted list, 14 per cent fall in the 5 per cent tax slab, 17 per cent in the 12 per cent slab, 43 per cent under 18 per cent tax rate and only 19 per cent of the items will fall under the highest 28 per cent tax slab in the new regime.
If the item-wise list of GST rates has got you confused over the impact of the GST on your budget, we have compiled a list of items that will get cheaper or costlier so you can plan in advance.
What gets Cheaper under the GST:
While most of the food items have been exempted from tax under the GST, others fall in lower tax category of 5 per cent or 12 per cent. Unpacked foodgrains, unbranded atta, maida, besan, fresh vegetables and fruits, salt will get cheaper as these items have been exempted from tax under the GST. Many of the processed food items which will fall under 5 per cent tax will also get cheaper.
Clothing and footwear have been put under different tax slabs ranging from 0 to 18 per cent. But most of them will get cheaper under the GST.
Products like soaps, hair oil and toothpaste will become cheaper at 18 per cent tax. They are currently taxed at 24-28 percent.
Airfares for economy class travel are expected to go down under the GST. These tickets have been placed in the 5 per cent tax bracket under the GST.
Tickets that cost less than Rs 100 will get cheaper in most states with new rate of 18 per cent. Most states charged 25-30 per cent tax on movie tickets.
The effect of GST on hotels will vary from segment to segment. However, non-luxury hotels and hotels with tariffs of less than Rs 7,500 are expected to get cheaper.
Two-wheelers with engine size below 350 cc, some categories of commercial vehicles including three-wheelers, SUVs will get cheaper under the GST. The tax rate varies from segment to segment.
Eating out at small restaurants will also cost less after implementation of GST. Small restaurants have been placed in the 5 per cent tax bracket under the new GST rates.
Kitchen items like pressure cookers, pans will get cheaper as they will be taxed at 12 per cent GST rate, much less than the current 19.5 per cent rate.
What will get costlier under the GST:
Tea, coffee and spices will be taxed at 5 per cent. Currently, they are taxed at 3-4 percent.
Products like shampoos and deodorants will be more expensive post GST.
Raw material used in building construction like metals and cement will become costlier under the GST.
All home appliances and consumer durables like television, air-conditioner, refrigerator and washing machine will attract a 28 per cent tax, higher than the existing rate of 23-28 per cent (depending on the state).
Aerated drinks, tobacco and luxury goods have been kept in the tax slab of 28 percent under GST and will get costlier. Coca Cola has already announced it will increase prices of Coke.
Courier services, mobile charges, insurance premiums, banking charges, broadband services will get costlier as the current service tax of 15 per cent will be replaced with 18 per cent GST.
Two-wheelers with engine capacity of more than 350 cc and three-wheelers will get costlier with the implementation of the GST.
Airfare for business class and train tickets will cost more. This has been placed in the 12 per cent tax bracket.
Fine dine restaurants, restaurants inside five-star hotels will cost more.
Movie tickets above Rs 100 will cost more with 28 per cent GST. However, the impact will vary from state to state depending upon the existing entertainment tax.
AC hotels that serve liquor and hotels with room tariffs between Rs 2,500 and Rs 7,500 will come under 18 per cent GST. Hotels with room tariffs above Rs 7,500 and 5-star hotels will come under 28 per cent GST, making the stay costlier.