The announced GST rates have certainly created a buzz over the market both domestic as well as internationally. The Council has decided for a multi-tiered structure of 0%, 5%, 12%, 18% and 28%. The fluctuations of tax rates are highly in flow throughout the nation.
Meanwhile, some of the items which got their price tags a bit cheaper are Tea (Less 0.9%), Jam (0.9%), Mobile phones (Less 4.4%) and very famous Corn Flakes (Less 5%). All these mentioned items along with several others are expected to be in the drop list with the little amount of percentage.
While coming to the impact of GST on Imported consumer goods and manufactured goods can be ascertained as:
- In the supply chain today, excise duty, CVD, and CST are not available as set off against VAT or CST on the sale of goods. This cascading effect of the tax is not likely to continue in GST.
- Entry tax and octroi levied on goods will not be levied in GST.
- In the case of goods where combined rate of excise duty and VAT (as mentioned by FM) is 30-31%, the effective rate under the current regime appears to be lesser.
- For goods that are classified under 5%, 12%, and 18% slab rates, effective tax cost might be lesser as compared to the current tax regime.
GST Impact on Services
- It is likely that all services will be taxed at a standard rate of 18%.
- Cascading of VAT, CST, entry tax, octroi and additional customs duty will not exist in GST regime.
- Most of the services are likely to be costlier due to increase in tax rate. However, the impact may not be as high as 3%x (from current service tax of 15%) if service providers pass on savings due to higher tax credits.