Business

Foodgrains to get cheaper; small cars to attract more tax

On the first day, the GST Council categorised 80 to 90 per cent goods and services under the four tax slabs stipulated under the GST Act. Essential commodities have been placed in the lowest tax bracket, that is five per cent. Rates close to the existing incidence of excise duty coupled with VAT or service tax has been considered to be the rate under GST. 

Foodgrains will cost less from July 1 when the nation-wide Goods and Service Tax (GST) is rolled out as the GST Council today decided to exempt the 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 per cent instead of present 22-24 per cent 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 Goods and Service Tax (GST) replaced current indirect taxes. 'Mithai' or sweets will attract 5 per cent levy.
Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 per cent, 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.

"We have finalised tax rates for majority of items as well as the exempt list (at today's meeting)," Jaitley told reporters here.

The GST rate for all but six out of the 1,211 items was decided on the first day, he said, adding the tax rate for items that would be decided tomorrow include gold, footwear, branded items and bidi.

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