The goods and services tax (GST) council met last week to revise GST slab rates for certain goods and services. Around 178 consumer goods were shifted from the 28% tax slab to the 18% one. The reduction in tax rates – it will be implemented from November 15 – means consumers are the biggest beneficiary. Businesses are expected to pass on the benefits to the customers. So, here is a list of things that may get cheaper in the coming days:
1) Daily needs
Detergents, shaving creams, shampoos, perfumes, razor, razor blade, cosmetics, and chocolates are likely to cost less now. That’s because they fall under the 18% tax bracket, as against the 28% earlier.
The tax rate on condensed milk, refined sugar, sugar cubes, pasta and diabetic food have also been revised from 18% to 12%. Further, GST will not be applicable on guar meal (cattle meal), sweet potatoes and Khandsari sugar.
While some media reports suggest that cost may come down by 5-15%, some industry experts feel that retail prices may not reflect tax cuts until new stocks are available in the market.
2) Mining & Construction
The reboot has positively impacted the cost of mining- and construction-related equipment.
Taxes on bulldozers, excavators, graders, levelers, loaders, road rollers, scraper, earth excavating machines have been reduced from 28% to 18%.
Further, GST won’t be applied on rigs, tools, spares and goods on cranes that are not being sold, as per a CARE Ratings report. Waiving taxes would also eliminate the paperwork and compliance issues that would otherwise have to be followed.
The housing sector is also likely to benefit to some extent. The tax rate for sanitary ware, mica, plyboard, marble slab, lamp, light fittings, cement, asphalt, granite slab, wires, cables has been revised to 18% instead of 28% earlier.The CARE report estimates that the reduction in taxes account for 5-6% of the total construction cost.
4) Drugs and pharmaceuticals
A free lifesaving medicine imported from an overseas supplier is exempted from Integrated GST (IGST). The exemption is subject to certification by the central or state Directorate General of Health Services (DGHS). The tax rate on medical grade oxygen has also been revised from 18% to 12%.
5) Airline industry
The GST revision has been friendly for the aviation sector as well. Taxes on aircraft engines have been slashed to 5% instead of 28% previously, while taxes on aircraft tyres and seats have also been pruned to 5% from the earlier 18%.
To sum up
Although the GST council has revamped the tax rates, it remains to be seen if companies will pass on the benefits to the customer. The next few months will have the answers to our questions.