GST Council to decide rate of Service tax today

Foodgrains and common-use products like hair oil, soaps, toothpaste and also the electricity will cost less from July first after the implementation of nation-wide Goods and Service Tax. 

The GST rates for all 1,211 items but six were finalised, yesterday, at the first day of the two-day meeting in Srinagar of the GST Council, headed by Union Finance Minister Arun Jaitley and comprising state representatives.GST Council decided to exempt the daily-use commodities from the levy. Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from GST. 

Currently, some states levy Value Added Tax (VAT) on them. Daily-use items like sugar, tea, coffee (barring instant coffee), edible oil and life-saving drugs will attract the lowest tax rate of 5 per cent, almost the same as current incidence. Milk and curd will continue to be exempt from taxation when the GST replaced current indirect taxes. 'Mithai' or sweets will attract 5 per cent levy.

The Common use products like hair oil, soaps and toothpaste will be charged with a single



national sales tax or GST of 18 per cent instead of present 22-24 per cent tax incidence through a combination of central and state government levies. 

The Council fitted all but six items in 5, 12, 18 or 28 per cent tax brackets. Seven per cent of the items fall under the exempt list while 14 per cent have been put in the lowest tax bracket of 5 per cent. Another 17 per cent items are in 12 per cent tax bracket, 43 per cent in 18 per cent tax slab and only 19 percent of goods fall in the top tax bracket of 28 per cent. 

Cars, ACs, refrigerators and Aerated drinks 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.

Mr. Jaitley said, the Council will today decide on the rate of tax for services. He said, the rates for bidis along with gold, footwear, bidi, biscuits, agriculture equipments and packaged food items would also be decided today. Two set of rules on transition provision and returns have been referred to legal committee.