GST Council rings in good news for common man; most daily use items to be cheaper from 1 July

Srinagar: Foodgrains, cereals and milk will cost less from 1 July when the Goods and Services Tax (GST) is rolled out as the GST Council on Thursday decided to exempt these daily-use commodities from the levy.

Common use products like hair oil, soaps and toothpaste will be charged with a single national sales tax or GST of 18 percent instead of present 22-24 percent tax incidence through a combination of central and state government levies.

The GST rates for all but six items were finalised at the first day of the two-day meeting here of the GST Council, headed by Union Finance Minister Arun Jaitley and comprising state representatives.

Milk and curd will continue to be exempt from taxation when the GST replaced current indirect taxes. Mithai or sweets will attract 5 percent levy. Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 percent, almost the same as current incidence.


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.

Fiile image of Arun Jaitley. PTI

Fiile image of Arun Jaitley. PTI

the GST for packaged food items is to be finalised.

Friday's meeting will also decide on the rate of tax for services, he said.

Seven percent of the items fall under the exempt list while 14 percent have been put in the lowest tax bracket of 5 percent. Another 17 percent items are in 12 percent tax bracket, 43 percent in 18 percent tax slab and only 19 percent of goods fall in the top tax bracket of 28 percent. As many as 81 percent of the items will attract 18 percent or less GST.

Aerated drinks and cars will be in 28 percent bracket. On top of the peak rate, small cars will attract a 1 percent cess, mid-sized cars will attract 3 percent and luxury cars 15 percent.

On gold, states demanded a 4 percent tax even though the rate is not among the 5, 12, 18 and 28 percent approved bands.


ACs and refrigerators will fall in the 28 percent tax slab while life saving drugs have been kept at 5 percent rate.

Jaitley said there will be no inflationary impact as most of the rates which are at 31 percent have been brought down to 28 percent.

Coal will attract GST of 5 percent as against the current tax incidence of 11.69 percent.

"Cereals will be in exempt list. But what is to be done with packaged and branded food that has to be separately decided. We are yet to make a decision on that," he said.

Jaitley said the key feature of today's rate decision has been that "tax rate under GST will not go up for any of the commodities. There is no increase. On many commodities, there is a reduction particularly because the cascading effect of tax is gone."

"Of several commodities, we have consciously brought down the tax. In the overall basket there would be a reduction, but we are banking on the hope that because of a more efficient system, evasion would be checked and tax buoyancy would go up. That despite reduction the revenue neutrality and tax buoyancy thereafter would be maintained," he added.


Published Date: May 19, 2017 07:09 am | Updated Date: May 19, 2017 07:39 am


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