- GST will subsume all major levies including excise, service tax and VAT
- It will transform India into a single market
- The GST Council will again meet on June 11
Here is a 10-point cheat-sheet:
Tax experts say that GST rate of 3 per cent rate on gold won't be significantly different from the current tax regime on the yellow metal and this would be welcomed by the jewellers. Currently, gold is taxed around 2 per cent - 1 per cent excise and 1 per cent VAT (value-added tax). But some states charge a higher VAT.
Mr Jaitley said at the GST Council meet that there were proposals to fix GST rate on gold between 2-5 per cent.
Prashant Deshpande, partner at Deloitte Haskins & Sells LLP, said the fixation of GST rate on gold at 3 per cent won't be much different from the current tax regime on gold. Praveenshankar Pandya, chairman of Gem & Jewellery Export Promotion Council (GJEPC), welcomed the 3 per cent GST rate on gold.
On the other hand, rough diamonds will attract a levy of 0.25 per cent. This move has been opposed by the industry. "We request the Government to reconsider its decision," said Mr Pandya. "Rough diamonds have been kept out of the purview of taxes even in various Asian countries which are globally competitive. It is difficult for gems & jewellery exporters to pay 0.25 per cent and then initiate process for refunds, etc."
Footwear costing below Rs 500 will be taxed at 5 per cent, while that above this amount will attract 18 per cent levy. Currently, footwear priced from Rs 500-1,000 attracts 6 per cent excise duty. Besides, states levy VAT on it.
As regards readymade garments, they will attract a levy of 12 per cent. Solar panels will be taxed at 5 per cent under GST. For footwear and textiles, Mr Jaitley said that a major concession has been given and the items being used by the common man will be taxed at low rates.
Biscuits would attract a rate of 18 per cent under the goods and services tax, "The biscuit industry would have expected some differentiation between lower price point products and higher, in line with apparels and footwear but it finds itself at 18 per cent category in entirely," said Pratik Jain, partner and leader indirect tax at PwC.
The GST Council today also approved the draft transition laws that will help switchover to the new tax regime. According to the new draft law decided today, once GST is implemented a company can claim credit of up to 40 per cent of their central GST (CGST) dues for excise duty paid on stock held by businesses prior to the rollout.
The GST Council had last month put over 1,200 goods and 500 services in the four tax brackets of 5, 12, 18 and 28 per cent. The long-awaited GST is hailed as biggest tax overhaul since independence. It will replace a slew of central and state levies, transforming Asia's third largest economy into a single market.
The GST Council will again meet on June 11, before the planned July 1 rollout of the new indirect tax regime. Mr Jaitley said the council at today's meeting was also apprised of the IT preparedness which is necessary for the successful rollout of GST. (With Agency Inputs)