IN­DIA FIXES GST RATES

Cul­mi­na­tion of 10 years of ef­forts to stream­line ar­chaic tax sys­tem

New Straits Times - - Business -

MUM­BAI in the world’s fastest-grow­ing ma­jor econ­omy.

The “over­all im­pact is not in­fla­tion­ary”, said Fi­nance Min­is­ter Arun Jait­ley late on Thurs­day after meet­ings in Srinagar, a city in the north­ern state of Jammu and Kashmir. “The tax bur­den hasn’t in­creased in any com­mod­ity. In many there is a re­duc­tion, par­tic­u­larly as tax on tax is gone. On some we have de­lib­er­ately brought tax down.”

Much of the work on the GST had al­ready been com­pleted, in­clud­ing the five broad “slabs” or tax rates. These in­clude a rate of zero for es­sen­tial items such as grains, five per cent for mass con­sump­tion items like cof­fee and 12 per cent for com­monly used prod­ucts such as processed foods. Rates for house­hold goods like soaps were pen­ciled in at 18 per cent and durables such as LED TVs at 28 per cent.

The gov­ern­ment an­nounced a de­tailed list on Thurs­day, which in­cluded a tax rate of five per cent for tea, 12 per cent for live horses and 28 per cent for ra­zor blades. Key cat­e­gories where rates would be higher than the cur­rent rate were two-wheel­ers, small cars, ce­ment, fruit juices and choco­lates, ac­cord­ing to Mum­baibased bro­ker­age Ko­tak In­sti­tu­tional Equities.

Lux­ury items will face a levy be­yond the 28 per cent top rate, in­clud­ing 160 per cent levy for chew­ing to­bacco, 12 per cent for soft drinks and 72 per cent for hookah prod­ucts. GST rates for cer­tain goods like tex­tile and pre­cious met­als are yet to be de­cided by the GST Coun­cil.

It said yes­ter­day rail­way and air trans­port ser­vices would at­tract a five per cent rate, lux­ury ho­tels would take the high­est rate, while health­care and ed­u­ca­tion would con­tinue to be ex­empt.

Nearly 81 per cent of the items would fall be­low the 18 per cent rate, said Rev­enue Sec­re­tary Has­mukh Ad­hia.

In­dia is join­ing about 160 coun­tries that have a GST, in­clud­ing Poland, Canada and Ja­pan.

The fed­eral gov­ern­ment has al­ready agreed on com­pen­sa­tion to states if rev­enue is lost due to the im­ple­men­ta­tion of the GST.

As of May 4, eight states in­clud­ing Ra­jasthan, Te­lan­gana, Bi­har, Mad­hya Pradesh, Haryana and Jharkhand had passed a state GST act in their state as­sem­blies. The re­main­ing states were likely to pass the state GST bill “be­fore the end of this month”, ex­cept for one or two, ac­cord­ing to a fed­eral gov­ern­ment state­ment. Bloomberg

BLOOMBERG PIC

Tea will be taxed at five per cent once In­dia im­ple­ments the Goods and Ser­vices Tax on July 1 as planned.

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