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How will the new GST rates impact common man? Know here

How will the new GST rates impact common man? Know here

India TV Business Desk, New Delhi [ Updated: November 04, 2016 12:46 IST ]
How new GST rates will impact a common man? Know here

The GST council on Thursday approved four main tax slabs – 5 per cent,12 per cent, 18 per cent and 28 per cent under a proposed Goods and Services Tax (GST) that aims to lower tax incidence on essential items and to keep the highest rate for luxury and demerits goods.

Here’s how new GST rates will impact the common man: 

  • Luxury items like high-end cars and demerit goods including tobacco, pan masala and aerated drinks, will be taxed at the highest rate and would also attract a cess in a way that the total incidence of tax remains at almost the current level. 
  • Tobacco currently attracts about 65 per cent total tax and for aerated drinks the current rate is about 40 per cent. 
  • With a view to safeguarding the interest of poor and keeping inflation under check, half the items in Consumer Price Index basket like foodgrains, would not be taxed at all. 
  • The lowest rate of 5 per cent will be on items of mass consumption which are used particularly by common people.
  • The third category of standard rate of 12 and 18 per cent would accommodate most of the goods and services. Those goods used by common man like soap, toothpaste, would be brought in the 18 per cent bracket.
  • The fourth slab of 28 per cent would be applicable mainly on white goods such as refrigerator, washing machine etc on which the present tax incidence is 30-31 per cent cent (excise duty of 12.5 per cent plus VAT 14.5 pc).
  • While the Centre proposed to levy a 4 per cent GST on gold, a final decision was put off as there was no consensus yet on tax rate for gold. 

The rates agreed by the GST Council have to be approved by Parliament, which meets from November 19 for the winter session. Once implemented, the new indirect tax regime - GST - will subsume various taxes including excise, services tax, octroi and other levies and the proceeds will be shared between the Centre and states.

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