Biscuits, footwear prices to fall, gold to get costlier

Jaitley: States are ready for new tax rule

Biscuits, footwear and low-priced garments will get cheaper from July 1 as GST Council on Saturday fixed lower tax rates on them. However, gold and gold jewellery and branded packaged food items will get costlier as GST Council put them under high tax category.

Fabric for the first time will be taxed under GST and has been put in 5 percent tax category. Rough diamonds will attract a tax of 0.25 per cent under GST so that government can track them to tackle black money. GST Council will meet again on June 11 to look at the representations of the trade bodies to lower tax rate of some essential items, which were fixed in earlier meetings. A panel will go through the proposals submitted by the trade and industry representatives. The next meeting of the GST Council will also decided tax rate for lottery. Finance minister Arun Jaitley said states are ready to implement the GST from July 1.

Biscuits, footwear and low-priced garments will get cheaper from 1st July as GST Council on Saturday fixed lower tax rates on them. However, gold and gold jewellery and branded packaged food items will get costlier as GST Council put them under high tax category.

At the meeting on GST, when asked about West Bengal refusing to pass state GST, finance minister Arun Jaitley said: “I am sure they will.”

Kerala Finance Minister Thomas Isaac said everybody has agreed for July 1 rollout”. However, West Bengal finance minister Amit Mitra said the rollout of the GST from July 1 will have “serious problems” and there is no harm in delaying its implementation by a month. To ensure that benefit of lower tax rates under GST are passed on to consumers and industry does not jack up prices, GST Council decided to set up an anti-profiteering committee which will take up complaints and recommend actions. The committee will have officials from Central revenue department and also some state-level officials.

The GST Council decide to bring gold and gold jewellery at 3 per cent tax rate under GST. Currently most of the states levy 1 per cent VAT on gold (except in Kerala, where the VAT is 5 percent) and Centre impose 1 per cent excise duty on it.

GST Council decided to tax biscuits at 18 per cent. Currently, overall tax incidence on biscuits prices below `100 per kilogram is 20.6 per cent and above `100 per kilogram is 23.11 percent. Footwear below `500 will attract a 5 per cent GST and products above `500 will be taxed at 18 per cent GST. Currently footwear below `500 is taxed at 9.5 percent and above `500 tax rate varies between 23.1 percent to 29.5 percent.

Finance minister said that packaged items of food, where food item is taxed at a zero rate, it was decided that those packaged items which were sold under registered trademark — as they are sold at much higher price and bought by different level of customers — will attract a GST rate of 5 per cent.

Made up apparel will attract 12 per cent GST but those below `1,000 will attract 5 per cent GST.

Officials said that currently apparel attract around 12 per cent taxes, so those below `1,000 will become cheaper under GST.

As far as fiber is considered silk and jute will be exempt from GST. Cotton and natural fiber and yarn will attract 5 percent tax. However, man made fiber and yarn will attract 18 per cent taxation.