Worried about GST rates? Know what gets cheaper and costlier from July 1

By the rates announced so far, it seems consumers can rest assured most items will become cheaper

The Goods and Services Tax (GST) rehime is set to be rolled out from July 1, more than 11 years after a formal process to introduce it began. The GST Council on Thursday fixed rates for 1,211 items. In the second half of the Council meet, on Friday, rates of services and products like beedi, cigarettes, tobacco, footwear, gold, textile, handloom, handicraft, agricultural equipment and biscuits, will be discussed.

It appears from the first set of announced rates that consumers can rest assured most of the items will become cheaper (for now) as the new rates will be lower than the current effective levies.

Mobiles phones, however, might get costlier, with the government imposing a 12% GST, taking away the benefit under duty differential that was being offered to local manufacturers. So, under the new GST rate, while imported phones will become cheaper, most locally manufactured ones will get costlier.

Foodgrains will cost less as the GST Council decided to exempt the daily-use commodities from the levy.

GST promises to stitch together a common national market by replacing a string of central and local levies such as excise, value added tax, octroi, service tax.

What will get cheaper?

"Categorisation of several consumer products like soaps, toothpaste and hair oil under 18 per cent is good news and should see price drop for consumers," said Pratik Jain, leader, indirect tax, PwC to Economics Times. "Similarly, several food items such as edible oil, tea, coffee, sugar, etc, have been kept at 5 per cent , with exemption for milk and foodgrain, which would also cheer industry."

Branded goods: Tax rates on branded goods have been slashed to 18 per cent. Currently, the effective tax rate for the three items is pegged at 23-24 percent.

Hotels: Staying at hotels post the implementation of GST will become cheaper as they are currently taxed at 22% and a posed to be under the 18% tax bracket.

Restaurants which will come down to 18% from 22% tax slab.

Foodgrains will cost less

Processed food items that draw tax rates of 15% will be taxed at 5% under GST.

Under services, entertainment services will be brought down from 22% to 18% under GST.

Soap which are currently taxed at 28% will be taxed at 18% under GST. Similarly toothpaste will come down from 22-24% current tax rate to 18%.

Personal hair products - hair oil will become cheaper as it will drop 10% from 28% current tax rate to 18% under GST.

Entry level cars, two-wheelers, paint, cement, electrical items, consumer durables are expected to get cheaper.

GST impact: What will get cheaper and expensive
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What will hurt your pocket:

Tea, coffee and masala that is taxed at 3-9% will be at 5% GST rate.

All luxury goods, aerated drinks and tobacco products are expected to be taxed at 28 per cent.

Mobile bills, insurance premiums, banking charges, internet, wifi and DTH services are likely to get costlier. 

School fees, courier services and air tickets to get expensive.

Small cars will be slightly expensive under the proposed goods and services tax (GST) regime, with a peak tax rate of 28 per cent.

Here's the complete list of GST rate card.

No tax will be imposed on the following items:

Fresh meat, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, stamps, judicial papers, printed books, newspapers, bangles, handloom etc.

5 per cent tax on 

Items such as fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will attract tax of 5 percent.

12 and 18 per cent tax on:

Frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, umbrella, sewing machine, cellphones, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors.

28 per cent tax: 

Chocolate not containing cocoa, pan masala, aerated water, paint, deodorants, shaving creams, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, automobiles, motorcycles, aircraft for personal use, and yachts will attract 28 per cent tax - the highest under GST system.

Bad news for Himachal Pradesh and Uttarakhand

Earlier, states like Himachal Pradesh and Uttarakhand offered similar benefits to attract investments. Under the GST regime, goods produced in such areas will no longer enjoy lower tax rates. Experts said, companies may need to adjust their production capacities and realign geographical distribution of their manufacturing to bring down the impact.