"One Nation, One Tax" : Goods and Services Tax (GST)

Independent India's most transformative & progressive indirect tax reform.

The Goods and Services Tax (GST) comes into force from July 1 and the country is bracing for one of its biggest tax overhauls in history.

GST will bring in a uniform indirect tax system by subsuming various central, state and local indirect taxes and levies.

The rollout of the GST will mean that multiple indirect taxes levied by both the Centre and states will be done away except for customs duty.

A dual Central and state GST will be applicable simultaneously on supply of goods and services within the state.

In the case of interstate supply of goods and services, an integrated GST will apply.

Barring Jammu and Kashmir, GST laws have been enacted by the Centre and all states.

The present indirect taxation system allows the Centre as well as states to charge different indirect taxes.

The Centre can levy custom and excise duty as well as service tax.

The states can charge value added tax (VAT), entry tax, entertainment tax, local body tax, stamp duty, land revenue tax etc.

GST is part of a One Nation, One Tax vision of the Modi-led government.

The present structure of the tax prevents cascading effect, gives ease of compliance, uniform tax rates and structure, and lowers extra tax burden on customers (GST is essentially a destination tax).

From 0% to 28%, here’s the breakup of what attracts how much GST.

♦ 0%
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●  No tax on will be imposed on items like jute, 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, bones and horn cores, bone grist, bone meal, etc, hoof meal, horn meal, cereal grains hulled, palmyra jaggery, salt -- all types, kaajal, children's picture, drawing or colouring books and human hair.

●  Hotels and lodges with a tariff below Rs 1,000 will also attract no tax. Grandfathering service has also been exempted under the GST. Rough precious and semi-precious stones, however, will attract a GST rate of 0.25 per cent.

♦ 5%
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●  Goods that will attract a tax rate of five (5) percent will include fish fillet, apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stents, lifeboats, cashew nut, cashew nut in shell, raisin, ice and snow, bio gas, insulin, agarbatti, kites, postage or revenue stamps, stamp-post marks and first-day covers.

●  Services that will attract a tax rate of five (5) percent will include transport services (railways, air transport) and small restaurants because their main input is petroleum.

♦ 12%
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●  Goods that will attract a tax rate of 12 percent will include apparel above Rs 1000, frozen meat products, butter, cheese, 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, cell phones, ketchup and sauces, all diagnostic kits and reagents, exercise books and note books, spoons, forks, ladles, skimmers, cake servers, fish knives, tongs, spectacles, corrective, playing cards, chess board and carom.

●  Services that will attract a tax rate of 12 percent will include state-run lotteries, non-air conditioned hotels, business class air tickets, fertilisers and work contracts.

♦ 18%
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●  Goods that will attract a tax rate of 18 percent will include footwear costing more than Rs 500, trademarks, goodwill, software, bidi patta, biscuits (all categories), 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, kaajal pencil sticks, headgear and parts thereof, aluminium foil, weighing machinery (other than electric or electronic weighing machine).

●  Services that will attract a tax rate of 18 percent will include AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST, room tariffs between Rs 2,500 and Rs 7,500 and restaurants inside five-star hotels.

♦ 28%
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●  Goods that will attract a tax rate of 28 percent will include bidis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, 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 and aircraft for personal use.

●  Services that will attract a tax rate of 28 percent will include private-run lotteries authorised by the states, hotels with room tariffs above Rs 7,500, 5-star hotels, race club betting and cinema.