GST impact: Here’s what will get cheaper and what will get dearer from July 1

Here is the list of items that are likely to get cheaper and dearer after GST rollout in July

By: News Desk |
May 19, 2017 2:26 pm

India is a gearing up for a unified indirect tax regime as Goods and Sevices Tax is set for a July roll out. Touted to be India’s biggest tax reform since independence, GST will subsume all other indirect taxes on supply of Goods and services, right from manufacturer to consumer. Backed by a comprehensive IT system, GST will eliminate entry barriers and will help in making India one unified common market. Finance Minister Arun Jaitley , who is presiding the two-day meeting of GST Council comprising state representatives, said that the new tax regime’s impact will not be inflationary and in some instances, prices are even likely to drop. The panel has decided to align all goods in the five slabs of taxation—5%, 12%, 18%, 28% and 28% plus cess on first day of the meet. As many as 81 per cent of the items will attract 18 per cent or less GST. The decision on services is likely to be taken in Friday’s meet.

We have compiled separate lists for commodities on the basis of tax slabs they have been put under

Goods that are likely to get cheaper

Daily consumption items such as milk, fruit and vegetables, jaggery or gur, foodgrain and cereals will cost less as they have been exempted from tax. Hair oil, soaps and toothpaste will be charged with a single tax of 18 per cent instead of present 22-24 per cent tax. With entertainment tax being subsumed in the GST, prices of movie tickets are expected to come down. Meat, honey, prasadam, kumkum, bindi, pappad and contraceptives have also been exempted from GST levy. There is also a huge slash for coal prices. Currently, it was taxed at a rate of 11.7%. After GST, the item will attract a GST rate of 5%.

No effect on Prices

Items like sugar, tea, coffee (barring instant coffee), edible oil, mithai, and newsprint have been placed in the lowest slab of 5 per cent, their prices will not be affected. Pizza bread, sevaiya, condensed milk, frozen vegetables will attract 5 percent levy.

Items that may become expensive

Cigarettes, pan masala, gutkha are set to get more expensive. Scented Zarda and filter Khaini will attract 160 per cent cess, for pan masala gutkha it would be 204 per cent. The cess would be levied over and above the peak GST rate of 28 per cent. Branded gutkha will be slapped with a cess of 72 per cent, while smoking mixtures for pipes and cigarettes will attract a levy 290 per cent. Filter and non-filter cigarettes not exceeding 65 mm will attract cess of 5 per cent plus Rs 1,591 per 1000 sticks.

Aerated drinks and cars will be in 28 percent bracket. Cars and motorcycles are likely to get dearer. petrol cars will face 28 per cent plus 1 per cent cess, and diesel small cars 28 per cent tax plus 3 per cent cess. Luxury cars will attract 28 per cent GST plus a cess of 15 per cent. The rate of the cess would depend on how expensive the car is. High-end motorcycles will attract 3 per cent cess. The cess will be used to compensate the states for revenue loss arising out of the GST implementation in first five years. With a tax levy of 28%, ACs and refrigerators are likely to get dearer.