GST set to Roll soon in India

Vandita Jadeja

10 Jun 2017

"With 81% of the goods likely to be taxed at 18% or below, one is left to believe that the new tax reform would not have any inflationary impact. The GST is expected to streamline the indirect tax structure in the county and simplify business environment."
 
The government seems to be on track for the launch of the revolutionary tax reform - Goods and Services Tax (GST) - in the country on July 1st. The GST Council that fixed rates of around 1,211 items under five slabs including nil, 5%, 12%, 18% and 28% in May, also closed rate fitments for gold, diamonds, textiles and garments, footwear and biscuits on June 3rd. The Council is scheduled to meet again on June 11th to discuss account and record rules, and e-way bill rules.
 
With 81% of the goods likely to be taxed at 18% or below, one is left to believe that the new tax reform would not have any inflationary impact. The GST is expected to streamline the indirect tax structure in the county and simplify business environment.
 
"With the anti-profiteering clause in place, companies would be required to pass on the benefit of tax rates to the consumer in the form of lower prices," says a report by ICICI Direct.
 
The report highlights on the expected shift in consumption behaviour from unbranded goods to branded products. Moreover, the 'one tax, one nation' policy is expected to de-bottleneck, and bring in operational efficiency and rationalisation of supply chain network across industries.
 
The GST rates for most of the products falling under categories like mineral fuels/oils, inorganic chemicals, organic chemicals, pharmaceutical products, tanning or dyeing extracts, fertilisers, essential oils and perfumery; soaps, washing and dental preparations have been kept at 18% or below. While products like cosmetic and beauty products, detergents, perfumes, paints and varnishes would attract 28% GST.
 
For the textile industry, the rate announcement has come as a significant relief with most of the textile and yarn kept under the 5% GST slab, except readymade garments which have been kept under the 12% bracket.

Highlights:
 
  • Personal care products, soaps, hair-oil and toothpaste have been kept under the 18% GST slab against the current 23-24%
  • Cosmetics and beauty related products, deodorants along with hair care category (shampoos, hair dye and cream) have been kept under the 28% GST slab
  • Detergents category has been kept under the highest GST bracket of 28% as against industry expectation of 18%. This might require companies to take price hike to pass on the burden
  • Paints and varnishes have been kept under the 28% GST slab, which is close to the current tax rates of 24-27% (approximately)
  • Putty and wall fillings as well as plaster have been kept under the 28% GST slab
  • Adhesive products category have been kept under the 18% GST slab. The tax on adhesives would come down substantially from the current rates of 23-24%, which could increase demand for these products as majority of the industry is dominated by unorganised players
  • Liquefied Propane, Liquefied Butane, their mixture, and Liquefied Petroleum Gases (LPG) that are for supply to household domestic consumers or to non-domestic exempted category (NDEC) have been kept under the 5% GST slab
  • Coal at 5% GST is a key development for the sector and is expected to make electricity more affordable for poor people and farmers.
  • It would help power producers in easing the piled up pressure and also other industries which are dependent on it either in the form of supplying goods or services
  • Sulphonated castor oil, fish oil or sperm oil is also kept under the 5% GST slab
  • Printing ink, writing or drawing ink and other inks, whether or not concentrated or solid, have been kept under the 18% GST slab
  • Tanning extracts of vegetable origin, synthetic organic tanning substances, colouring matter of vegetable or animal origin, synthetic organic colouring matter, colour lakes and pigments (including metallic powders and flakes), have been kept under the 18% GST slab
  • While in the fertilisers category, the GST Council has exempted organic manure from any tax, the commonly used fertilisers and micronutrients have been placed under the 12% GST slab. Meanwhile, the inputs (ammonia and phosphoric acid) used by the industry are placed under 18% GST slab
  • Fountain pen ink and ball pen ink have been kept under the 12% GST slab. The tax remains at the same level like it is currently on these products
  • Agarbatti and other odoriferous preparations which operate by burning have been kept under the 12% GST slab, which is contrary to the incense makers expectation of nil to 5% GST by the government. At present, aromatic incense sticks (agarbatti) attracts zero excise duty and value-added tax (VAT) in most of the states
  • Attar, typically distillates of flowers, herbs and spices, that also have spiritual use has been put under the 18% GST slab
  • Kumkum, bindi and alta have been exempted from GST
  • Petroleum gases and other gaseous hydrocarbons such as Propane, Butanes, Ethylene, Propylene, Butylene and Butadiene have been kept under the 18% GST slab
  • Petroleum jelly, paraffin wax, micro-crystalline petroleum wax, slack wax, ozokerite, lignite wax, peat wax, other mineral waxes, and similar products obtained by synthesis or by other processes, whether or not coloured, have been placed under the 18% GST slab
  • Petroleum coke, petroleum bitumen and other residues of petroleum oils or of oils obtained from bituminous minerals have been kept under the 18% GST slab
  • Inorganic chemicals like fluorine, chlorine, bromine, iodine, sulphur, mercury, carbon (carbon blacks and other forms of carbon not elsewhere specified or included), alkali or alkaline-earth metals, rare-earth metals and boric acids have been placed under the 18% GST slab
  • Organic chemicals like acyclic hydrocarbons, sulphonated, nitrated or nitrosated derivatives of hydrocarbons (whether or not halogenated) and phenols and phenol-alcohols have been placed under the 18% GST slab
 
 
 

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