The 5% GST tax slab is the noteworthy one as it includes essential commodities such as food items, footwear and basic clothing. The GST council is expected to increase the tax rate under this slab to 6-8%
Your grocery bill is likely to go up soon if the GST council decides to increase the current 5% tax rate on essential products and services to 6-8% at its meet on December 18. Key commodities such as tea, coffee, frozen vegetables and medicines, which fall in this tax slab, will get dearer burning a deep hole in common man’s pocket.
The all-powerful GST Council, chaired by Finance Minister Nirmala Sitharaman will take a call on the tax rate hike to shore up a shortfall in collections and pending compensation to many states. Currently, all products and services fall under four tax slabs under the GST regime – 5, 12, 18 and 28%. Restructuring the slab rates might aid the government to garner additional revenues of Rs 1,000 crore per month.
The 5% tax slab is the noteworthy one as it includes essential commodities such as food items, footwear and basic clothing. The GST council is expected to increase the tax rate under this slab to 6-8%.
A group of officers from the Centre and states, which met on Tuesday to finalise recommendations for rate rationalisation, is said to have considered various options including raising rates from 5 per cent to 8 per cent and 12 per cent to 15 per cent, sources told PTI. A detailed presentation on rate rationalisation will take place during the GST Council meeting on December 18.
The GST Council meeting is also likely to deliberate on raising cess on some products to meet the growing need for compensation, among other issues. The Council can explore the possibility of a merger of slabs to bring down the number of slabs to three, sources told the news agency. It is likely to revisit the exemption list and explore whether cess can be levied on some services.
Essential products currently falling in 5% GST rate are:
1. Tea
2. Coffee
3. Kerosene
4. Coal
5. Frozen Vegetables
6. Processed spices
7. Rusk
8. Medicines
9. Soyabean
10. Idli, dosa batter
11. Vegetable oils
12. Handmade safety matches
13. Skimmed Milk Powder
14. Branded Paneer
15. Processed Spices
16. Groundnut
17. Steel utensils
18. Apparel
19. Khadi yarn
20. Footwear under Rs 1000
21. Insulin
22. Fertilisers
23. Ayurvedic/unani/siddha/homeopathy medicines(unbranded)
24. E-books
25. Solar power generating system
26. Electric vehicles
27. Parts and accessories for the carriages for disabled person
Services currently under 5% GST rate are:
1. Railways-Transportation of goods, passengers
2. Goods transported in a vessel from outside India
3. Renting a motor cab without fuel cost
4. Transport services in AC contract/stage or radio taxi
5. Transport by air (scheduled)/air travel for purpose of pilgrimage via chartered/non-scheduled flights
6. Tour operator services
7. Leasing of aircrafts
8. Print media ad space
9. Working for the printing of newspapers
Source: businesstoday.in
