Impact of revised GST Rate on various sectors

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Impact of revised GST Rate on various sectors 2017-07-07T14:00:14+00:00

GST India Forum – Goods and Services Tax (GST) in India Forums Article Impact of revised GST Rate on various sectors

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  • Avalara IndiaAvalara India
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    GST rates revised

    Over the past three weeks, the Goods and Services Tax (GST) Council — comprising union and state finance ministers — announced the rates for 1,211 goods and around 500 services, all falling into four tax slabs: 5, 12, 18, and 28 percent. In addition, several mass-consumption items will attract zero tax. They were met with a flood of requests for revisions.

    On 11 June, the council met to review the rates on the basis of representation made by the industries and traders. Finance Minister Arun Jaitley addressed the outcome of the review, saying, “After considering the recommendations, the GST Council has reduced the tax level in 66 out of 133 items on which representations were made by the industries”.

    The overall weighted average of all tax rates decided by the council is much lower than the rates people pay today, he said. “Therefore, there will be an adverse revenue impact if other things remain equal. But we are also hoping for revenue buoyancy and a check on inflation that GST will ensure so as to make up for that loss”.

    The finance minister added that under GST, traders, manufacturers, and restaurants with turnover of up to Rs 75 lakh can use the composition scheme with lower rates of 5, 2, and 1 percent, respectively, with lower compliance against Rs 50 lakh earlier. Whether or not the same increased turnover limit for the composition levy will apply in the case of special category states will be decided in the next council meeting on 18 June.

    Jaitley also said that “in certain cases the rate fitment committee went beyond the equalization principle of maintaining the current tax incidence”.

    The tax rate on job works was also lowered to facilitate the outsourcing of business activities.

    Jaitley, however, hinted that the GST rate on hybrid cars will not be reviewed. The environmentally friendly hybrid cars will attract a 15 percent cess over and above the 28 percent GST rate, the same rate levied on large luxury cars and sport utility vehicles.

    Rate increases and decreases following the 11 June review

    S.No.Chapter /heading /sub-heading /tariff itemDescription of goodsEarlier GST rate Revised GST rate Increase/decrease
    1.0506, 0507, 90Bones and horn cores, bone grist, bone meal, etc. Hoof meal, horn meal, etc.5%0% Decrease
    2.0801Cashew nut12%5%  Decrease
    3.0801Cashew nut in shell12%5% (under reverse charge)  Decrease
    4.0806Raisin12%5%  Decrease
    5.1104Cereal grains hulled5%0%  Decrease
    6.1702Palmyra jiggery18%0%  Decrease
    7.20 (All goods)Preparations of vegetables, fruits, nuts, or other parts of plants, including pickle,murabba, chutney, jam, jelly18%/12%12%  Decrease
    8.2103, 2103, 00, 2103 90Ketchup and sauces (other than curry paste, mayonnaise, and salad dressings; mixed condiments and mixed seasoning) Mustard, Sauces18%12%  Decrease
    9.2103 90 10,2103 90 30,2103 90 40Curry paste, mayonnaise, and salad dressings, Mixed condiments and mixed seasonings28%18%  Decrease
    10.2106Bari made of pulses including mungodi18%12%  Decrease
    11.2201 90 10Ice and snow12%5%  Decrease
    12.2501Salt, all types5%0%  Decrease
    13.27Bio gas12%5%  Decrease
    14.28Dicalcium phosphate (DCP) of animal feed, grade conforming to IS specification No. 5470/200212%0%  Decrease
    15.30Insulin12%5%  Decrease
    16.29, 30, 3302(i)Menthol and menthol crystals, (ii)Peppermint (mentha oil),(iii) Fractionated/de-terpenated mentha oil (DTMO), (iv) De-mentholised oil (DMO), (v) Spearmint oil, (vi) Mentha piperita oil18%12%  Decrease
    17.3304 20 00Kajal (other than kajal pencil sticks)28%0%  Decrease
    18.3304 20 00Kajal pencil sticks28%18%  Decrease
    19.3307Agarbatti12%5%  Decrease
    20.3407Dental wax28%18%  Decrease
    21.3822All diagnostic kits and reagents18%12%  Decrease
    22.3926Plastic beads28%12%  Decrease
    23.3926 90 99Plastic tarpaulin28%18%  Decrease
    24.4202(i) School satchels and bags other than of leather or composition leather, (ii)  Toilet cases (4202 12 10), (iii)  Hand bags and shopping bags of artificial plastic material (4202 22 10),of cotton (4202 22 20), of jute (4202 22 30), , vanity bags, (iv)  Handbags of other materials excluding (4202 22 40), wicker work or basket work (4202 29 10)28%18%  Decrease
    25.4820Exercise books and notebooks18%12%  Decrease
    26.4823Kites12%5%  Decrease
    27.4903Children’s picture, drawing, or coloring books12%0%  Decrease
    28.57Coir mats, matting, and floor covering12%5%  Decrease
    29.65 [All goods]Headgear and parts thereof28%18%  Decrease
    30.6703Human hair, dressed, thinned, bleached, or otherwise worked28%0%  Decrease
    31.68Fly ash blocks28%12%Decrease
    32.6810 11 90Pre-cast concrete pipes28%18%  Decrease
    33.6906Salt-glazed stoneware pipes28%18%  Decrease
    34.7015 10Glasses for corrective spectacles and flint buttons18%12%  Decrease
    35.71Rough precious and semi-precious stones3%0.25%  Decrease
    36.7607Aluminum foil28%18%  Decrease
    37.8215Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs18%12%  Decrease
    38.8308All goods, including hooks and eyes28%18%  Decrease
    39.84Pawan chakki that is air-based atta chakki28%5%  Decrease
    40.84Fixed speed diesel engines28%12%  Decrease
    41.4011Rear tractor tyres and rear tractor tyre tubes28%18%  Decrease
    42.8708Rear tractor wheel rim, tractor centre housing, tractor housing transmission, tractor support front axle28%18%  Decrease
    43.8423Weighing machinery (other than electric or electronic weighing machinery)28%18%  Decrease
    44.8443Printers (other than multifunction printers)28%18%Decrease
    45.8482Ball bearings, roller bearings, parts, and related accessories28%18%  Decrease
    46.8504Transformers industrial electronics28%18%  Decrease
    47.8504Electrical transformer28%18%  Decrease
    48.8504Static convertors (UPS)28%18%  Decrease
    49.8521Recorder28%18%  Decrease
    50.8525CCTV28%18%  Decrease
    51.8525 60Two-way radio (walkie talkie) used by defense, police, and paramilitary forces, etc.28%12%  Decrease
    52.8528Set top box for TV28%18%  Decrease
    53.8528Computer monitors not exceeding 17 inches28%18%  Decrease
    54.8539Electrical filaments or discharge lamps28%18%  Decrease
    55.8544Winding wires28%18%  Decrease
    56.8544Coaxial cables28%18%  Decrease
    57.8544 70Optical fiber28%18%  Decrease
    58.8472Perforating or stapling machines (staplers), pencil sharpening machines28%18%  Decrease
    59.8715Baby carriages28%18%  Decrease
    60.9002Intraocular lens18%12%  Decrease
    61.9004Spectacles, corrective18%12%  Decrease
    62.9017Instruments for measuring length, for use in the hand (for example, measuring rods and tapes, micrometers, calipers)28%18%  Decrease
    63.9403Bamboo furniture28%18%  Decrease
    64.9504Playing cards, chess board, carom board, and other board games, like Ludo, etc. (other than video game consoles and machines)28%12%  Decrease
    65.9506Swimming pools and padding pools28%18%  Decrease
    66.9603 10 00Muddhas made of sarkanda and phool bahari jhadoo5%0%  Decrease
    67.9704Postage or revenue stamps, stamp-post marks, first-day covers, etc.12%5%  Decrease
    68.9705Numismatic coins12%5%  Decrease
    69.4823, 8472, 90 11,9101, 9102, 9021Braille paper, braille typewriters, braille watches, hearing aids, and other appliances to compensate for a disability (These goods are covered in List 32 appended to notification No. 12/2012-Customs, dated 17.03.2012 and are already at 5% GST [Chapter 90])5% Increase

    Source: GST India website

    Overall, the government has taken a commendable step in responding to industry recommendations within such a short time span and reducing/modifying the rates of almost 50 percent of the items in question.

    In the council’s next meeting on 18 June, they will take up residual issues related to the pending draft rules like the E-way Bill, rate for lottery, etc.

    Jaitley said that, “Irrespective of the date on which it starts, some people will say they are not ready, so they have no option but to get ready”.

    “With potentially two more council meetings, we will be down to the wire for July 1 implementation,” said Harishanker Subramaniam, national leader, indirect tax, EY India.

    The government has been making sincere efforts to ensure hassle-free implementation of GST. Some of the steps taken in this regard are:

    • Reduction in GST rates
    • Launching of Twitter handle to answer queries

    So now it’s time for us to gear up for the upcoming reforms under GST to ensure a smooth transition

    Harisha Reddyharisha reddy
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    GST and Impact on Businesses

    The Goods and Services Tax (GST) promises to bring a single unified tax regime for India. But what exactly does a single unified tax regime mean and why is this better than what exists today.
    For more detailsh ttps://

    The current situation is there are different taxes for different activities:

    Each of these taxes will apply to different items sold and purchased, at different points in the supply chain and be paid by different parties. This leads to a situation where you can have certain items taxed under two taxes which increases costs. An example of this is off the shelf software which can attract value added tax and service tax, which can push up the cost of the software. Also, as the rules are not clear on how to apply the taxes to the sale of software this leads difficulties for businesses because there is not a standard rule to apply, and in an abundance of caution businesses will apply VAT and Service Tax.

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