All You Need To Know About Goods And Services Tax
We all know that the GST amendment Bill has been passed by the Rajya Sabha and is all set to changes our lives once and for all. It is going to be implemented from July 1 and is touted to be the biggest indirect tax reform since Independence. Here are some facts about what it is and how it is going to affect your life, read on:
1) THE NEW TAX
The Goods and Services Tax is a new form of indirect tax which will replace others like service tax, sales tax, octroi, central and state sales tax that we are currently liable to pay under the current multi-tax system. Rajya Sabha approved the bill on August 8, 2016.
2) ONE TYPE OF TAX FOR ALL
GST is expected to make India a unified market. Currently, each state has its own taxes such as VAT, sales tax, entertainment tax, purchase tax, mandi tax, luxury tax, octroi and entry tax which will come under an umbrella tax of SGST, which makes every state a different market. Under the policy, the Centre will levy Central GST and Integrated GST, while states will charge SGST.
3) FOUR SLOTS
There are going to be four slots of percentages of taxes to be levied under GST — 5%, 12%, 18% and 28%, reported HT.
4) WHAT’S TAX FREE?
There are several products on which no tax will be charged like jute, fresh meat, fish chicken, eggs, milk, buttermilk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, Bones and horn cores, bone grist, bone meal, etc.; hoof meal, horn meal, cereal grains hulled, Palmyra jaggery, salt – all types, kajal, children’s drawing or colouring books, human hair, which comprise of 50% of CPI inflation basket, reported Economic Times.
5) WHAT’S EXEMPT?
Also, services like hotels and lodges with tariff below Rs 1,000 have been exempted from GST.
6) FOODS AND VEGETABLES
5% tax slot covers like fish fillet, apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats, cashew nut, cashew nut in shell, raisin, ice and snow, bio gas, Insulin, agarbatti, kites, postage or revenue stamps, stamp-post marks.
Transport services (railways, air transport), small restaurants are a few services that come under the 5% tax slot.
8) WHAT’S COVERED UNDER 12%
The 12% tax slot covers apparel above Rs 1000, frozen meat products, butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, cellphones, ketchup & sauces, All diagnostic kits, exercise books and notebooks, spoons, forks, ladles, skimmers, cake servers, fish knives, tongs, spectacles, playing cards, chess board, carom board and other board games like Ludo.
9) BUSINESS CLASS TICKET?
State-run lotteries, non-AC hotels, business class air ticket, fertilizers, work contracts services will be charged at 12%.
10) THE EXPENSIVE STUFF
The third slot and the second highest at 18% tax will be imposed at goods including footwear costing more than Rs 500, bidi patta, biscuits (all categories), flavored refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors, kajal pencil sticks, headgear and parts thereof, aluminium foil, weighing machinery [other than electric or electronic weighing machinery], printers [other than multi-function printers], electrical transformer, CCTV, optical fibre, bamboo furniture, swimming pools and padding pools, curry paste; mayonnaise and salad dressings; mixed condiments and mixed seasonings.
11) SERVICES UNDER 18%
The services that come under 18% tax rate are AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST, Room tariffs between Rs 2,500 and Rs 7,500, restaurants inside five-star hotels.
12) THE SIN STUFF
The highest of these all tax 28% will be charged on goods like bidis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles and aircraft for personal use. Currently, 27-31% tax is levied on these items.
Services that are levied 28% tax are private-run lotteries authorized by the states, hotels with room tariffs above Rs 7,500, 5-star hotels, race club betting and cinema.
14) FOR THE STATES
There is going to be a compensation bill under GST for states for the first five years. This means that if states incur a revenue loss because of GST, they will be compensated for it. Money for such compensation will come from a cess fund accumulated by the Centre by charging tax on certain goods.
15) THE EXECUTION
Both the Centre and states are going to evaluate taxpayers who have an annual turnover of Rs 1.5 crore and above. While states can also assess those taxpayers with a turnover below Rs.1.5 crore.
16) WHO ALL ARE EXEMPT?
People with an annual turnover of Rs 20 lakh will be exempted from paying GST across the country, except the North-Eastern states where the limit is Rs 10 lakh.
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