GST Council clears rules, fixes rates on last six items to roll out GST from July 1

05 Jun 2017 Evaluate

With less than a month to go for the roll out of the new indirect tax regime, the all powerful GST Council has cleared the pending rules, including transition provisions and filing of returns, in the process addressing some concerns of the industry over the earlier drafts, with all states agreeing to July 1 roll out of the Goods and Services Tax (GST). Besides, the GST Council, in its fifteenth meeting, has also fixed the GST rates for a clutch of items, including gold, diamonds, textiles and garments, footwear and biscuits, almost completing the exercise of rate fitment.

Federal indirect tax body has decided to tax Gold, silver and jewellery made of these metals at 3%. Currently, apart from 1% excise and 1% or slightly higher tax on sales by states, gold imports attract basic customs duty of 10%. BCD will remain in the GST regime, while the excise duty and VAT will be subsumed in it. It also decided to tax rough diamond at 0.25% and placed agriculture equipment at two slabs of 5% and 12%.

Packaged and branded food items will attract GST at 5%, tendu leaves at 18% and bidi at the highest rate of 28%. Unlike cigarettes, there will be no cess on bidi. Further, biscuits will be taxed at a flat rate of 18%. Currently, biscuits costing less than Rs 100/kg attract an average tax of 20.6%, while those above this price attract 23.11%. Both have been fitted in the nearest tax slab of 18%. Footwear costing up to Rs 500 currently attracts 9.5% tax, and in GST it would be taxed at 5%. Rest are taxed between 23.1-29.58%, which in GST regime, would be levied 18% tax.

In the textiles category, silk and jute fibre have been exempted, while cotton and natural fibre and all kinds of yarns will be levied a 5% GST. However, man-made fibre and yarn will attract a 18% tax rate. All categories of fabric will attract a 5% rate. Man-made apparel up to Rs 1,000 will attract a 5% tax, lower than the existing 7%. Those costing above Rs 1,000, will continue to attract 12%. Moreover, solar panels will be taxed at 5%, against 18% specified earlier.

The council also decided to enhance the deemed credit for transition stocks in case of items that attract GST at 18% or 28% to 60% of the tax liability, while retaining such credit at 40% for others, addressing a major concern of the industries, including firms manufacturing automobiles, FMCGs, white goods and aerated beverages. Besides, the GST Council will meet again on June 11, 2017, to consider industry requests for concessions and any other pending issue.

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