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Big changes likely in GST rates next week; these items can get expensive

The 5% GST tax slab is the noteworthy one as it includes essential commodities such as food items, footwear and basic clothing. The GST council is expected to increase the tax rate under this slab to 6-8%

twitter-logoBusinessToday.In | December 11, 2019 | Updated 18:18 IST
Big changes likely in GST rates next week; these items can get expensive
Key commodities such as tea, coffee, frozen vegetables and medicines, which fall under the current 5% GST tax slab, will get dearer burning a deep hole in common man's pocket

Your grocery bill is likely to go up soon if the GST council decides to increase the current 5% tax rate on essential products and services to 6-8% at its meet on December 18. Key commodities such as tea, coffee, frozen vegetables and medicines, which fall in this tax slab, will get dearer burning a deep hole in common man's pocket.

The all-powerful GST Council, chaired by Finance Minister Nirmala Sitharaman will take a call on the tax rate hike to shore up a shortfall in collections and pending compensation to many states. Currently, all products and services fall under four tax slabs under the GST regime - 5, 12, 18 and 28%. Restructuring the slab rates might aid the government to garner additional revenues of Rs 1,000 crore per month.

The 5% tax slab is the noteworthy one as it includes essential commodities such as food items, footwear and basic clothing. The GST council is expected to increase the tax rate under this slab to 6-8%.

Also Read: GST Council meet Updates: Tax relief for hotels; caffeinated drinks get costlier

A group of officers from the Centre and states, which met on Tuesday to finalise recommendations for rate rationalisation, is said to have considered various options including raising rates from 5 per cent to 8 per cent and 12 per cent to 15 per cent, sources told PTI. A detailed presentation on rate rationalisation will take place during the GST Council meeting on December 18.

The GST Council meeting is also likely to deliberate on raising cess on some products to meet the growing need for compensation, among other issues. The Council can explore the possibility of a merger of slabs to bring down the number of slabs to three, sources told the news agency. It is likely to revisit the exemption list and explore whether cess can be levied on some services.

Also Read: Centre seeks suggestion from states to increase GST collection ahead of GST Council meet

Essential products currently falling in 5% GST rate are:

1. Tea

2. Coffee

3. Kerosene

4. Coal

5. Frozen Vegetables

6. Processed spices

7. Rusk

8. Medicines

9. Soyabean

10. Idli, dosa batter

11. Vegetable oils

12. Handmade safety matches

13. Skimmed Milk Powder

14. Branded Paneer

15. Processed Spices

16. Groundnut

17. Steel utensils

18. Apparel

19. Khadi yarn

20. Footwear under Rs 1000

21. Insulin

22. Fertilisers

23. Ayurvedic/unani/siddha/homeopathy medicines(unbranded)

24. E-books

25. Solar power generating system

26. Electric vehicles

27. Parts and accessories for the carriages for disabled person

Also Read:GST council meet: FM Sitharaman likely to recommend tax cuts on 20-25 products

Services currently under 5% GST rate are:

1. Railways-Transportation of goods, passengers

2. Goods transported in a vessel from outside India

3. Renting a motor cab without fuel cost

4. Transport services in AC contract/stage or radio taxi

5. Transport by air (scheduled)/air travel for purpose of pilgrimage via chartered/non-scheduled flights

6. Tour operator services

7. Leasing of aircrafts

8. Print media ad space

9. Working for the printing of newspapers

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