prpri 4 years of GST – Rate Changes Post Introduction 4 years of GST – Rate Changes Post Introduction

Overall, GST rates have been reduced on 400 goods and 80 services. Given that, in the pre-GST regime, the combined Centre and States rates were more than 31% on most of the items; this reduction marks a significant relief for the taxpayer.

OTHER CONCESSIONS

  • Threshold increased to Rs 40 lakh in goods. Composition increased (Rs 75 lakh to Rs 1.5 crore)
  • Composition rate lowered from 2% to 1% for manufacturers
  • Composition Scheme extended to services
  • Special lower rates prescribed for construction, restaurants etc without ITC

Rates reduced on 400 items (goods) and 80 items (services) since roll out of GST.

Weighted GST Rate

Benefit of Rs. 1 lakh crore in a year given by these rate reductions

Rate Changes Post Introduction

Common-use items such as hair oil, toothpaste, and soap have seen their tax rates come down from 29.3% in the pre-GST era to just 18% under GST.

How GST has Significantly Reduced Tax on Household Goods

Description of goods Pre-GST GST Rate at Present
Sugar 6% 5%
Sweetmeats 7% 5%
Ketchup & Sauces 12% 12%
Topping, spread and sauces 12% 12%
Mineral water 29.3% 18%
Agarbatti 10% 5%
Tooth powder 17% 12%
Hair oil 29.3% 18%
Toothpaste 29.3% 18%
Soap 29.3% 18%
Kites 11% 5%
Footwear of sales value up to Rs. 1000 per unit 10% 5%
Other Footwear 21% 18%
Paints and varnishes (including enameis and Lacquers) 31.3% 18%

Tax on Household Goods

Appliances such as fridges, washing machines, vacuum cleaners, food grinders and mixers, shavers, hair clippers, water heaters, hair dryers, electric smoothing irons, TVs (up to 32 inches) have all seen tax rates lowered from 31.3% to 18% due to GST.

Description of goods Pre-GST GST Rate at Present
Refrigerator and Other cooling/freezing equipment 31.3% 18%
Washing machine 31.3% 18%
Vacuum cleaners 31.3% 18%
Domestic electrical appliances such as food grinders and mixers & food or vegetable juice extractor, shaver, hair clippers 31.3% 18%
Storage water hearters and immersion hearters, hair dryers, hand dryers, electric smoothing irons etc 31.3% 18%
Televisions up to the size of 32 inches 31.3% 18%
LPG Stove 21% 18%
Aluminum foils 19% 18%
LED Lams 15% 12%
Kerosene pressure lantern 8% 5%

Tax on Household Goods 2

The tax on cinema tickets, earlier anywhere between 35% to 110%, has been brought down to 12% (where ticket rate is up to Rs 100) and 18% in the GST regime.

Most items of daily use are in the zero or 5% slab. The construction of residential complexes saw a steep reduction in rates to 5% in general and 1% for affordable houses. Restaurants were also brought down to 5%.

Substantial concessions have been extended to the agriculture sector in GST. On fertilisers, the net tax incidence was halved in GST. On agricultural machineries, the tax incidence has come down significantly from 15% / 18% to 12% and on certain items from about 8% to 5%.

HOW GST MAKES AGRICULTURAL INPUTS/EQUIPMENT CHEAPER

GST has significantly reduced the tax on agriculture related machinery/implements

Items Pre-GST GST Rate at Present
Chemical fertilizers 10% 5%
Drip irrigation system, sprinkler system including laterals and mechanical sprayers 15 to 16% 12%
Tractors 16% 12%
Fixed Speed Diesel Engines up to 15 HP Self-loading or self-unloading trailers for agricultural purposes and Hand propelled vehicles 15% 12%
Machinery for preparing animal feeding stuffs, poultry incubators and brooders, germination plant 19% 12%

Agricultural Input and Equipment Cheaper

The pre-GST tax incidence on chemical fertilisers was above 10%. (1% excise duty, 2.44% embedded excise duty, about 4% weighted average VAT and 2.5% CST, Octroi, etc.) while in the GST regime all types of chemical fertilisers only attract a 5% tax rate.

Most of the agriculture related machinery/implements are at “nil”, 5% or 12% GST rates

Items GST Rate
Organic manure without unit containers and brand name Nil
Organic manure with unit containers and brand name 5%
Fertilizers grade Phosphoric acid 5%
Cattle feed, aquatic feed and poultry feed Nil
Hand tools, such as spades, shovels, hoes, axes, mattocks, hedge shears, hay knives, timber wedges Nil
Flour mill machinery, Rice mill machinery, machines for cleaning, L,sorting or grading, etc. and parts 5%
Ploughs, harrows, cultivators, weeders, rotary hoes, disc harrows, seeders, planters, trans planters, fertilizer distributors, lawn or sports ground ,rollers, rotary tillers 12%
Harvester or thresher, straw or fodder balers, mowers 12%

Agricultural Input and Equipment Cheaper 2

Cattle feed, aquatic feed and poultry feed have all been kept at a Nil rate in GST, as have all kinds of seeds. In other words, these vital inputs in the agricultural process do not attract any tax under the GST system.

Source- Ministry of Finance

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