GST rollout: Aam aadmi’s monthly budget likely to get hit; Check out list of goods that will become expensive after July 1

While packaged goods will be charged high rates of tax under the GST regime, certain basic essentials have been exempted from taxation keeping in mind the requirements of the weaker sections of the society.

Updated: May 22, 2017 2:34 PM IST

By Srividhya Iyer

GST (File Photo)
GST (File Photo)

Mumbai, May 22: The Goods and Service Tax (GST) council on Friday, categorically divided a majority of goods and services into four slabs of taxation. The move is set to have a significant impact on the monthly expenses of households across the country.

The GST council has determined that tax slabs will include 5, 12, 18 and 28 per cents. While categorising all the goods and services, fitment has been done taking into account the current levels of state and central levies exercised on them. The council, however, has placed many items of common usage in higher tax slabs.

While it is expected that GST will bring down the inflationary effects in the market, families should plan for higher levels of expenditure, at least in the initial months after the rollout of the GST.  The following goods of common and everyday use have been placed in the higher tax slabs of 18 and 28 per cent:

18 per cent tax slab: Condensed milk, malt, margarine, vegetable fats or oils, refined sugar (containing flavouring), pasta, noodles, cornflakes, pastries, cakes, preserved vegetables and fruits, jams, soups, ice cream, sauces, tea and coffee extracts, mineral water, LPG for cooking, essential oils, hair oil, toothpaste, soap, matches, kitchenware, clothes, dresses, toilet and facial tissues, paper, erasers, envelopes, helmets, hats, glasses, cars for physically handicapped persons, balloons, clocks including watches and buttons among other goods. 

28 per cent tax slab: Chewing gum, white chocolate, dark and milk chocolate, cocoa powder, Waffles, Wafers coated with chocolate, pan masala, aerated drinks, paints, Artists’, students’ or signboard painter’s colours, perfumes, all items used for makeup, shampoos, conditioners, dental floss, after-shave preparations, deodorants, facewash, bags, wallpaper, wigs, false beards, eyebrows and eyelashes, tiles, bricks, stoves, aluminium foil, razors, cutlery etc

Finance Minister Arun Jaitley however, noted that despite the higher tax rates, prices of goods wouldn’t go up. In a statement issued earlier, he said, “tax rate under GST will not go up for any of the commodities. There is no increase. On many commodities, there is a reduction particularly because the cascading effect of the tax is gone.”

He then added, “Of several commodities, we have consciously brought down the tax. In the overall basket, there would be a reduction, but we are banking on the hope that because of a more efficient system, evasion would be checked and tax buoyancy would go up. That despite reduction the revenue neutrality and tax buoyancy thereafter would be maintained.”

While packaged goods will be charged high rates of tax under the GST regime, certain basic essentials have been exempted from taxation keeping in mind the requirements of the weaker sections of the society. These include meat, milk, eggs, water, buttermilk, lassi, coconut water, paneer, honey, curd, paneer, live plants and animals, fresh vegetables and fruits, oats, wheat, jaggery, bread, salt, firewood, bangles and hearing aids among others. The goods and services tax is set to come into effect from July 1.

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