At a two-day meeting of the Goods and Services Tax (GST) Council in Srinagar, the capital of India’s northernmost state of Jammu and Kashmir, India finalized tax rates that will apply to different goods and services from July 1. A panel comprising federal and state finance ministers fixed the rates for over 1211 items under the Goods and Services tax.
No tax will be imposed on food items such as fresh meat, fish chicken, eggs, milk, butter milk, yogurt, natural honey, fresh fruits and vegetables, flour, bread, and salt to mention a few. Stamps, judicial papers, printed books, newspapers, and bangles, are some of the non-food items which will not be taxed.
A 5% tax will be applied on items such as fish fillet, cream, skimmed milk powder, frozen vegetables, coffee, tea, spices, and edible oil for example. Kerosene, coal, medicines, stents and lifeboats will also be taxed at 5%.
A 12% tax will be levied on frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, savory snack items. Ayurvedic medicines, tooth powder, incense, coloring books, picture books, umbrellas, sewing machines, and mobile phones also fall in this tax bracket.
An 18% tax slab will be applied to refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, and mineral water to name a few. Tissues, envelopes, tampons, note books, steel products, printed circuits, cameras, speakers and monitors also fall in this tax slab.
A 28% tax – the highest in the GST system – will be levied on chewing gum, molasses, waffles and wafers coated with chocolate, and aerated water. This tax slab also includes items such as paints, deodorants, shaving creams, after shave lotions, shampoos, dyes, sunscreen, wallpaper, ceramic tiles, water heaters, dishwashers, weighing machines, washing machines, vending machines, vacuum cleaners, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use.
No Tax on Education and Healthcare services, hotels and lodges with tariffs below $15. The services that are currently exempt shall continue to be exempt under the GST regime. Services by government, and foreign diplomatic missions are also covered in the exemption list.
A 5% tax will apply to transport services such as railways, and economy class air transport, cab aggregators, and small restaurants.
A 12% tax will be levied on hotels that do not have air conditioners, business class air tickets, fertilizers, and work contracts.
An 18% tax slab will apply to hotels that have air conditioning and that serve liquor, telecom services, IT services, branded garments, insurance, and financial services.
Input tax credit will lower all taxes. E-commerce establishments will deduct 1% tax at source before paying suppliers. The GST Council will take up taxation of gold and other precious metals and items such as packaged foods, footwear and textiles at the next meeting on June 3, India’s Finance Minister Jaitley said. Taxation of lottery service has also not been decided yet reports the Economic Times.
