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GST: 80% items within 18% rate, says CBEC

LiveMint logoLiveMint 30-06-2017 PTI

New Delhi: The landmark goods and services tax (GST) will not alter the prices of essentials and daily use items like salt and soaps as they have either been exempt or tax on them has been kept at the current level.

Unbranded food staples including vegetables, milk, eggs and flour will be exempt from GST along with health and education services.

Tea, edible oils, sugar, textiles and baby formula will attract only 5% tax. These essential and daily use items make up for about 80% of the goods used.

Luxury items including motorcycles, perfume and shampoo, which account for about 19% of all taxable items, will be taxed at 18% or higher.

GST, the biggest tax reform since Independence, will unify 16 different central and state taxes like excise, service tax and VAT, to create a uniform rate of tax across the country from midnight Friday.

The tax department has been working overtime to inform people about GST, revenue secretary Hasmukh Adhia said, adding that the new regime “will bring in transparency, help cut tax evasion and benefit honest taxpayers”. “For small businesses, we have composition scheme. It is very simple,” Adhia said.

Earlier, traders with turnover of above Rs10 lakh were paying VAT at full rate, but they were exempt from excise. But now, a trader with turnover of Rs20-75 lakh will have to pay 2.5% tax. Businesses with turnover of Rs20 lakh will be exempt.

Under the composition scheme where the turnover does not exceed Rs75 lakh, manufacturers will have to pay 1% of turnover as GST, traders—2.5% and 0.5% of turnover in state in case of other suppliers.

CBEC in advertisements said single tax GST will bring down prices for most household. “GST a boon for households. 81% of items to fall below or in 18% GST slab,” it said.

Butter, ghee, almonds, fruit juice, mobiles and umbrella have been placed in 12% tax bracket while 18% rate would be levied on hair oil, toothpaste, soap, ice cream, and printers. The highest tax of 28% will be levied on chewing gum, chocolates, custard powder and waffles containing chocolate. Besides, cars, aerated drinks, AC, refrigerators and capital goods and all industrial intermediaries will attract the highest rate.

The new tax regime, to be effective midnight Friday, will replaces the messy mix of more than a dozen state and central levies built up over seven decades, with a one national GST unifying the country’s $2 trillion economy with 1.3 billion people into a common market.

GST will require businesses to file their returns online, for which the company providing the IT backbone GST network has been working on the modalities. The returns are to be uploaded once a month by retailers following which the return form are to be matched for availing input credit and thereafter the computer will generate the tax liability. “Today Income Tax returns are also filed online, so nothing is impossible, it is easy,” Adhia said.

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