This Article is From May 19, 2017

After GST, Dal, Foodgrain, Daily Consumer Goods To Be Cheaper

The Goods and Services Tax or GST will replace a string of state and central taxes from July 1. Rates of consumer goods will come down

GST or Goods and Services Tax seeks to replace a series of state and central taxes.


  • Milk will be exempted from GST; foodgrain will be cheaper
  • Hair oil, soap, tooth paste to attract 18% GST
  • Sugar, tea, coffee, edible oil to also attract 5% tax
New Delhi: The Goods and Services Tax or GST could bring good news for crores in the country. A crucial meeting of the GST Council on Thursday finalised tax rates for over 1,000 commodities that makes sure people will not have to pay more when India's biggest tax reform in decades kicks in on July 1. In fact, the government announced that food items - pulses, rice, milk and grain - along with some others would get cheaper.

But the council's marathon meeting in Srinagar could not come to a consensus on how six items including gold and beedis should be taxed. Also, in the council's to-do list for Friday, is fixing a tax rate for goods such as biscuits, footwear, textiles, handloom handicraft and power-driven agricultural equipment.

The council is the highest policy-making body to implement the one nation-one tax reform that replaces a bundle of central and state levies. It comprises the centre's nominees and state finance ministers.

Jewellers had shut shops for days when Finance Minister Arun Jaitley introduced a 1 per cent central excise on the yellow metal in his 2016 budget. The states wanted a 4 per cent tax on gold but the centre is holding its ground since it doesn't want to introduce another tax rate apart from the existing rates.

Under GST, a small list of goods will be exempt from taxes. The rest will be taxed at the approved rates of 5, 12, 18 and 28 per cent. About 55 categories of items such as cars will also attract a cess of 1, 3 and 15 per cent over and above the 28 per cent tax. The rate of the cess would depend on how expensive the car is. High-end motorcycles will attract 3 per cent cess.

On the positive side, there are consumer durables that will a little cheaper. Officials said items such as air conditioners used to be effectively taxed at 32 per cent or more. Now they have been put in 28 per cent slab which means the sector which has been battling dipping sales figures can expect a shot in the arm.

"There is no increase in taxes of the items considered today. In fact, for many of them, taxes have come down," finance minister Arun Jaitley told reporters in the Jammu and Kashmir capital after the meeting fixed tax rates for 1,204 items. He expected the council to seal the rates for the remaining commodities at its meeting tomorrow.

The Centre is keen to prune the list of items exempt from taxes from 299 to 100-odd. Many state finance ministers are, however, pulling in the opposite direction and want this list to be expanded. Not surprisingly, because they don't stand to lose if tax collections fall short of targets. The Centre had to guarantee a minimum growth of 14 per cent in revenue associated with GST-able goods to get them on board during the transition period.

Mr Jaitley said GST is an efficient system of taxation and this inherent efficiency will help curbing tax evasion.

Revenue Secretary Hasmukh Adhia said since the cascading impact of multiple central and state level will be gone due to GST, several other daily use items like toothpaste, hair oil, and soap will attract 18 per cent GST against 28 per cent tax currently. Even cereals prices will witness a climb down as they have joined the exempt category compared to the 5 per cent tax rate levied on them. Sugar, tea, coffee will meanwhile attract 5 per cent tax rate.