Goods and Services Tax

GST is levied on all transactions such as sale, transfer, purchase, barter, lease, or import of goods and/or services. India adopted a dual GST model, meaning that taxation is administered by both the Union and State Governments. Transactions made within a single state will be levied with Central GST (CGST) by the Central Government and State GST (SGST) by the government of that state. For inter-state transactions and imported goods or services, an Integrated GST (IGST) is levied by the Central Government. GST is a consumption-based tax, therefore, taxes are paid to the state where the goods or services are consumed not the state in which they were produced. IGST complicates tax collection for State Governments by disabling them to collect the tax owed to them directly from the Central Government. Under the previous system, a state would have to only deal with a single government in order to collect tax revenue.

The GST is imposed at different rates on different items. This is in addition to state taxes that are also levied. Thus, the rate of GST is 18% for soaps and 28% on washing detergents. GST on movie tickets is based on slabs, with 18% GST for tickets that cost less than Rs. 100 and 28% GST on tickets costing more than Rs. 100

GST Rates on Services

• Almost all the services have been fitted into four different rates, which are 5%, 12%, the standard 18% and the luxury rate of 28%
• Travelling on metro, local train, religious travel, Haj yatra will all be exempt from GST: revenue secretary, Hasmukh Adhia.
• AC train travel to get cheaper under GST
• Transport services (Railways, air transport) will be under the 5% category because their main input is petroleum, which is outside GST ambit.
• Service tax on non-AC hotels will 12%, on AC hotels that serve liquor will be 18%. Higher tax rate for luxury hotels.
• Hotels and lodges with tariff below Rs 1,000 will be exempt. Those with Rs 2,500-5,000 will be 18%. Luxury hotels will face tax of 28%.
• 28% tax slab on 5-star hotels, race club betting, cinema.
• 18% tax slab for telecom, financial services
• Healthcare and education have been exempted from the service list. 
• The council has deferred the decision on the tax rates for gold, and also on bidis and cigarettes, to its next meeting, which is scheduled for June 3.
• Restaurants with an annual turnover of less than Rs 50 lakh will fall under the 5 percent tax slab, while non-ACs food joints will be taxed at 12 percent. Air-conditioned restaurants with liquor licences will be taxed at 18 percent.
• Cinema halls were currently paying a service tax of 15 percent plus a state entertainment tax that ranged from 28 percent to about 100 percent. All these will be subsumed under the 28 percent GST rate, bringing out the costs of service significantly, Jaitley said. Casinos will also come under the 28 percent tax bracket.
• Work contract services such as those paid by civil contractors for infrastructure construction currently pay a central tax of 6 percent, state taxes ranging from one to five percent, but without any input credit.
• E-commerce players to deduct tax at source before paying suppliers. E-retailers such as Flipkart and Snapdeal to pay GST
• Mobile phones, fountain pen ink, tooth powder, incense sticks, feeding bottles, Braille paper, children’s colouring books, umbrellas, pencil sharpeners, tractors, bicycles, contact lenses, spectacle lenses, utensils, sports goods, fishing rods, combs, pencils and hand paintings have been placed under the 12% tax rate under GST.
• Cheaper Services after GST – Radio taxi, Movies, Entertainment services , AC train travel, Air travel, Restaurants, Dhabas

GST Rates on Goods:

The GST Council today finalised tax rates for 1,211 items with a majority of items being kept in under 18 per cent rate slab.

• Sugar, Tea, Coffee (except Instant) and edible oil to fall under 5 per cent slab, while cereals, milk to be part of exempt list under GST.
• In a big boost to industry, Council has set the rate for capital good, industrial intermediate items at 18 per cent
• Coal to be taxed at 5 per cent against current 11.69 per cent
• Tooth paste, hair oil, soaps will be taxed at 18 per cent, it is being tax at 28 per cent, currently.
• Common man items have gone into 12 per cent and 18 per cent slab
• Indians sweets or mithai in 5 per cent slab.
• Hair oil, toothpaste and soaps will be taxed at 18 percent under GST, significantly lower than the present effective rate of 28 percent.
• Most exemptions for services to continue
• Service tax, luxury tax will be subsumed in GST
• GST rate for branded garments at 18 per cent
• Transportation to fall under 5 per cent bracket
• GST Council to mull beedi, cigarette, gold
• All hotel services with tariff over Rs 5,000 to be taxed at 28 per cent

small cars will face 28% GST, along with a small cess, while luxury cars will attract 15% cess in addition of the tax. Consumer durables such as AC and fridge too are in the 28% bracket, although officers said given the current incidence of 30-31%, there should be a reduction in prices.

Items under 0% GST 

There is no tax  on items like fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom etc. cli

Items under 5% GST 

Items such as fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will attract tax of 5 percent. 

Items under 12% GST 

cheese,Frozen meat products , butter,  ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, and cellphones will be under 12 per cent tax slab. 

Items under 18% GST 

items are under this tax slab which include flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors. 

Items under 28% GST 

molasses,Chewing gum, chocolate not containing cocoa, waffles and wafers coated with choclate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use, and yachts will attract 28 per cent tax – the highest under GST system. 

Below is a comprehensive list of the goods and services which will become cheaper from July 1 when GST comes into force:

Eatables
1. Milk powder
2. Curd
3. Butter milk
4. Unbranded natural honey
5. Dairy spreads
6. Cheese
7. Spices

8. Tea
9. Wheat
10. Rice
11. Flour
12. Spices
13. Groundnut oil
14. Palm oil
15. Sunflower oil
16. Coconut oil
17. Mustard oil
18. Sugar
19. Jaggery
20. Sugar confectionery
21. Pasta
22. Spaghetti
23. Macaroni
24. Noodles
25. Fruit and vegetables
26. Pickle
27. Murabba
28. Chutney
29. Sweetmeats
30. Ketchup
31. Sauces
32. Toppings and spreads
33. Instant food mixes
34. Mineral water
35. ice
36. Sugar
37. Khandsari
38. Biscuits
39. Raisins and gum
40. Baking powder
41. Margarine
42. Cashew nuts

Items of daily use
1. Bathing soap
2. Hair oil
3. Detergent powder
4. Soap
5. Tissue papers
6. Napkins
7. Matchsticks
8. Candles
9. Coal
10. Kerosene
11. LPG domestic
12. Spoons
13. Forks
14. Ladles
15. Skimmers
16. Cake servers
17. Fish knives
18. Tongs
19. Agarbatti
20. Toothpaste
21. Tooth powder
22. Hair oil
23. Kajal
24. LPG stove
25. Plastic tarpaulin