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Goods and Services Tax (GST) is the most significant reform in the history of indirect taxation in the country. Earlier a plethora of taxes were charged throughout the states in the entire country. GST is an improvement over the previous tax system since it centralizes the taxation system to a large extent. It is now easy for the common man to understand the percentage of indirect taxes that they are charged on any service. GST as a taxation system is aligned with the government's idea of a common national market.

The GST system was rolled out in July 2017. In total, the GST Council fixed a percentage of taxation on 1,211 items. GST Council has put 1300 goods and 500 services under five  GST slabs, 0%,5%, 12%, 18% and 28% where most of the items are covered under the 18% slab since the government decided to put only luxury items under the high-end 28% tax slab, so about 177 items in the 28% slab were moved to 18% tax slab.

Implementation of GST has resulted in a decrease in the tax burden for the consumers. Since the government plans on developing a synchronized national market, GST could help in boosting the position of Indian market globally.

One of the significant Benefits of Goods and Services Tax is the transparency that it offers to the taxpayers. The earlier indirect tax system was so complicated that only a handful number of people understood the system.

GST Latest Updates-2019

The latest updates on Goods and Service Tax (GST) - 2019 is here:

  • The 32nd GST Council meeting was held on 10th January 2019 at New Delhi, chaired by Shri Arun Jaitley. The announcements made in this meeting gave relief to MSMEs and small traders. Here is a list of the key takeaways of the meeting:

    • An increase in the GST registration limit from Rs. 20 lakhs to Rs. 40 lakhs for suppliers of goods.

    • The turnover limit to join the scheme is increased to 1.5 crores, and the tax must be paid quarterly and the returns must be filed annually starting from 1st April 2019. These changes were made to the existing composition scheme.

    • The turnover limit to join the scheme is set to Rs. 50 lakhs and the tax rate to 6% for the New Composition Schemes.

    • There were no rate cuts announced.  GoMs were formed to study the taxation of lotteries and under-construction properties.

    • Calamity cess for 2 years is charged up to 1% for supplies made within the State of Kerala.

  • The 33rd GST Council meeting was initially supposed to be held on 20th Feb 2019 via video conferencing but was later delayed to 24th Feb 2019 to meet at Delhi due to the refusal by some state FMs as the general elections were around the corner. It was chaired by the Finance Minister, Arun Jaitley. This was the first meet after the Interim Budget 2019. The sops announced by the GST Council promise to boost the real estate selling henceforth, ensuring the rate cut benefits to the neo and middle-class home buyers.

    • The affordable housing GST rate slashed to 1% from 8% without any benefit to the Input Tax Credit (ITC). However, the earlier proposal pointed out that the rate must be slashed down to 3% without the ITC benefit.

    • GST rate for non-affordable housing slashed to 5% without ITC from the existing rate of 12%.

  • The 34th GST Council meeting, chaired by Shri Arun Jaitley, was held on 19th March 2019 via video conference. The meeting was held to pass the notifications drafted by the legal and the rate fitment committees on the recent housing rate cuts. These rate cuts were announced at the 33rd GST Council meeting that was held on 24th February 2019. The highlights of this meeting are:

    • The committee approved the transition plan to implement the new tax structure for housing units.

    • The rates for new projects to be mandated from April 1.

    • Builders of existing housing projects must choose either of the two alternatives:

      • Choose the current rate of 12% (8% for affordable housing) and charge this GST rate in the invoices raised. Further, the ITC benefit is available to the buyer.

      • Choose to bear GST at a rate of 5% (1% for affordable housing). The benefit of ITC will not be available to the builder for the procurements used in construction.

    • Whoever chooses the second option must reverse the ITC that was accumulated on their closing stock of properties that are under-construction within six months.

    • A new rate of 5% (1% for affordable housing) is applicable to the residential properties whose construction is going on after 31st March 2019 or any new projects launched after 1st April 2019. Here, the ITC procurement benefits will not be available to the builders.

  • On 28th Mar 2019, the due date for ITC-04 of July 2017-March 2019 was extended to 30th June 2019.

Rate of GST on Some Common Items

The government proposed a 4-tier tax structure for all the goods and services under these 4 slabs- 5%, 12%, 18%, and 28%. Also, there are a few goods for which there is no tax. You can simply go through the table and find out the recent tax rates of some of the common items that fall under the 4 slabs.

Tax Rates

Products

28%

Luxury items such as small cars, premium cars, cigarettes, aerated drinks, consumer durables like AC and refrigerators, high-end motorcycles, etc.

18%

Toothpaste and soaps, capital goods, hair oil, and industrial

intermediaries are covered in this slab.

12%

This includes processed food and computers.

5%

Household necessities such as edible sugar, spices, oil, tea, and coffee (except instant) are included. Mishti/Mithai (Indian Sweets), Life-saving drugs and coal are also covered under this slab.

  • Edible items like sugar, tea, and coffee were included in the 5% tax slab, but milk does not attract any tax under this new GST regime. The idea here is to ensure the availability of basic food items to everyone. Instant food does not fall under this category.

  • Basic household items like toothpaste, hair oil, etc. that attracted 28% tax, will be now taxed at 18% only.

  • Sweets are also taxable at 5%.

  • The tax rate on coal is reduced from 11.69% to 5% to relieve the pressure on power industries.

  • GST also tries to give a push to the domestic industries. Make in India campaign is set after this reform.

No Tax

We started enjoying the zero GST tax rate for the goods mentioned below as it is added to the previous list on the 11th of June:

  • Hulled cereal grains like wheat, barley, oats, rye, etc.

  • Wastes of the bones and horns

  • All types of salt

  • Palmyra jaggery

  • Dicalcium Phosphate of animal feed grade conforming to IS specification No. 5470:2002

  • Kajal [other than pencils and sticks]

  • Drawing books, picture books, and coloring books for children

  • Human hair – thinned, bleached, dressed or otherwise worked

  • Unit container-packed frozen branded uncooked/steamed vegetables

  • Sanitary napkins

  • Music books/manuscripts

  • Vegetables preserved using different techniques including brine and other preservatives, which are not suitable for immediate human consumption.

New features of GST

Before the implementation of GST, the taxes levied on goods and services were separated. The Central Government had control over the taxation on goods manufacture and the State Government had complete autonomy in the taxation on the sales of goods.

Post implementation of GST, both Centre and state have the power to levy and collect taxes.

The tax rules under GST regime are listed below:

  1. The earlier system of taxation focused on the sale/manufacture of goods and services, but GST concentrates on the supply of goods and services.
  2. GST is destination-based, unlike the origin-based tax system which was earlier applicable on all the goods and services.
  3. GST levied by Centre is called Central Goods and Services Tax or CGST
  4. GST collected by the State is called State Goods and Service Tax or SGST  
  5. Taxes levied by Union Territories is known as UTGST or Union Territory Goods and Service Taxes
  6. On the Inter-State supply of goods and services, IGST or Integrated Goods and Services Tax is collected by the Centre.
  7. CGST replaces the following Taxes earlier collected by the Centre:
    1. Excise Duty on Medicine and Toiletries

    2. Central Excise Duty

    3. Additional Duties of Excise on goods of special importance

    4. Additional duties of excise on textiles

    5. Additional duties of customs

    6. Special Additional Duty of Customs

    7. Surcharges and cesses

    8. Service Tax

  8. SGST has taken the place of the following taxes which were levied by the state before the GST regime:

    1. State VAT

    2. Purchase Tax

    3. Central Sales Tax

    4. Tax on luxury items

    5. Entertainment Tax

    6. Entry Tax

    7. Advertisement Tax

    8. Tax on Gambling and Lotteries

    9. State cess and surcharges

  9. Apart from alcohol and other narcotics consumed by the consumers, GST applies to all goods and services.GST and Central Excise Duty are levied on tobacco products. There are five tax slabs under the GST regime, namely, 0%,5%,18%,28%, where the 0% tax slab is meant for the goods and services that are exempted from taxation.
  10. Input Tax credit is the amount of taxes paid on the inputs which are reduced from the total taxes paid on the output. Input credit that corresponds to CGST/SGST/UTGST is used for paying the CGST/SGST/UTGST on the output. This means that the channels of input credit are distinct and they would never cross-over, except for the Integrated Goods and Services Tax payments.
  11. E-filing of the taxes is made available to the taxpayers.
  12. One of the special features of GST is the anti-profiteering clause which ensures that the business owners pass on the benefits accrued from the tax cuts to the consumers.
  13. The government has introduced GST Network. The GST network is a private company and will be mainly providing services to the taxpayers-registration, payment, and return. As of now, 25 states have approved to avail the GSTN services. One of the functions of the GST Network is to develop a robust IT system that could help in smoothening the transition from the old taxation system to the GST regime.
  14. There are 34 financial technology and IT companies that could act as GST Suvidha Providers (GSPs). These companies will be developing software to be used in applications that could make the implementation of GST easier.

Which goods and services become cheaper under GST?

Food Items

  1. Curd
  2. Cheese
  3. Dairy spreads
  4. Spices
  5. Unbranded natural honey
  6. Milk powder
  7. Buttermilk
  8. Tea
  9. Sweetmeats
  10. Wheat
  11. Chutney
  12. Rice
  13. Murabba
  14. Flour
  15. Pickle
  16. Spices
  17. Fruits and vegetables
  18. Groundnut oil
  19. Noodles
  20. Palm oil
  21. Macaroni
  22. Sunflower oil
  23. Spaghetti
  24. Coconut oil
  25. Pasta
  26. Mustard oil
  27. Sugar Confectionery
  28. Sugar
  29. Jaggery
  30. Cashew nuts
  31. Ketchup
  32. Margarine
  33. Sauces
  34. Baking powder
  35. Toppings and spreads
  36. Raisins and gum
  37. Instant food mixes
  38. Biscuits
  39. Mineral water
  40. Khandsari
  41. Ice
  42. Sugar

Commodities for daily use

  1. Plastic tarpaulin
  2. Bathing soap
  3. LPG stove
  4. Hair oil
  5. Kajal
  6. Detergent powder
  7. Soap
  8. Tooth powder
  9. Tissue papers
  10. Toothpaste
  11. Napkins
  12. Agarbatti
  13. Matchsticks
  14. Tongs
  15. Candles
  16. Fish knives
  17. Coal
  18. Cake servers
  19. Kerosene
  20. Skimmers
  21. LPG domestic
  22. Ladles
  23. Spoons
  24. Forks

Stationery:

  1. Printers
  2. Pens
  3. Carbon paper
  4. Notebooks
  5. Parchment paper
  6. All types of paper
  7. Picture, drawing, and coloring books
  8. Graph paper
  9. Exercise books
  10. School bag

Healthcare:

  1. Medicines for cancer and diabetes
  2. Insulin
  3. Glasses for corrective spectacles
  4. X-ray films for use in medicine
  5. Diagnostic Kits
  6. Apparels:
  7. Apparel up to Rs.1,000
  8. Silk
  9. Footwear below Rs.500
  10. Woolen fabrics
  11. Gandhi Topi
  12. Khadi yarn

Others:

  1. Fly ash bricks and blocks
  2. Diesel engines of power below 15HP
  3. Cement
  4. Tractor rear tires and tubes
  5. Hotels with tariff below Rs.7,500
  6. Weighing machinery
  7. Economy-class air tickets
  8. Static converters (UPS)
  9. Scooters
  10. Electric transformers
  11. Motorcycles
  12. Winding wires
  13. Luxury cars
  14. Helmet
  15. Kites
  16. Crackers and explosives
  17. Movie tickets less than Rs.100
  18. Lubricants
  19. Bikes

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