GST Tax Rate Slabs Demystified – From 0% to 28% in 4 Tax Slabs


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Centre and State Governments have finally reached a consensus on determining the tax rate slabs under Goods and Services Tax Bill. This will help in breaking the barriers which restrained pan-India implementation of GST and in unifying the commerce activities of all traders and merchants – right from Punjab to Assam; Gujarat to Tamil Nadu.

Now, as the tax rate slabs have been finalized, Govt. may finally implement GST effective April, 2017 across India.

Tax rate slabs were finalized after Day 1 of GST Council Meet concluded yesterday.

Finance Minister Arun Jaitley said, “The decision was taken by complete consensus. All of the Congress finance ministers strongly supported the proposal in one voice,”

Note here, that Gold hasn’t yet been included in any tax bracket. A special GST Council meet would be organized for finalizing the items which would be included in different tax brackets.

GST Tax Rate Slabs Demystified

Under the present arrangement, Govt. has decided to implement a 4-slab tax structure under GST regime, which shall cover every product and commodity sold or bought in India.

Interestingly, slab zero is 0% tax rate which has been finalized for 50% of basic commodities included in the Consumer Price Index, which will help rural population to a greater degree, and help in controlling inflation.

Under 0% tax rate, commodities such as food grains, rice, wheat are included.

The first slab is 5% tax, under which products of mass consumption are included such as spices, tea and mustard oil.

Second slab is 12% under which processed food items has been included.

Third slab is 18% tax, under which items such as soaps, oil, toothpaste, refrigerator, and smartphones have been included. Right now, these products are taxed more than 25% tax rates, which would go down after GST is implemented.

Fourth slab is 28%, but there are two tiers under that: Under 28% slab, white goods and cars are included. Currently, whatever products are included in the 27-31% would be included in this tax bracket.

Meanwhile for 28% plus cess, sin products such as luxury cars, tobacco products, pan masala and aerated drinks are included. This cess would be applied by Centre, in a manner which allows higher tax which is currently charged.

Hence, if some tobacco products attract 32% tax currently, then GST regime, Centre will apply a cess charge of 4% besides 28% as finalized yesterday.

During the first year of GST implementation, overall loss to states is expected at Rs 50,000 crore. The cess on 28% besides energy cess would be used by Centre to compensate for this loss.

Ecommerce, Digital and IT industry would be especially looking out for tax slabs for services industry, which is expected to be finalized around 15-18%.

On Friday, the GST Council will again meet to decide the sharing of administrative powers between Centre and State Governments. As per various analysts, that would be the real test of character for GST Council members, as both the parties would try to seize as much control as they can.

We will keep you updated as more details come in..


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Sources: 1, 2, 3

  1. Chintak says

    I am not sure how the consumer will get benefit of it except in case of products not sold under MRP like vegetables etc.

    Products having MRP won’t go down. The tax saved will be part of profit of the company and i doubt the benefit will be passed on to consumers.

    Rs. 10 biscuit will be sold as Rs. 10 only. The difference of tax will be profit for the organization.

    However good thing is that, prices will not go up due to GST which was earlier feared! This shows Govt’s commitment to handling inflation, price rise.

    Also at what rate service tax would be levied ? I mean, at present 15% service tax is levied. What would be its rate in GST?

    1. Vinoth Kumar says

      Please confirm Whether we are getting tax for vermeceli and Maida in GST Tamil Nadu

    2. Nikhil Anand Gupta says

      @Chintak – I am not a Finance Guy. But just want to share a thought on the eg which you have stated. If there is a vendor who continues to sell biscuits at the same price, there by increasing his profit. There will be another vendor/competitor who would reduce the cost to increase his sale. This would force the first vendor to thereby decrease his prices.
      Your case would be applicable where in vendor has monopoly over the market. e.g. – fevicol.

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