The GST council is meeting again on Friday to decide on more items.
The Goods and Services Tax (GST) council on Thursday finalised tax rates for 1,211 items. The apex decision making body for the new tax has kept a majority of the items under the 18% slab. Prices of most items of mass consumption are likely to fall significantly due to lower tax burden under GST.
Foodgrains, including cereals and jaggery, have been exempted from GST, while sugar, tea, coffee and edible oil have been placed in the 5 per cent tax slab. Items of daily need such as toothpaste, soap and hair oil will be taxed at 18 per cent under GST, against 28 per cent at present.
“The tax has not increased on any commodity and there has been a reduction in the tax on many commodities as the cascading effect has reduced,” Union Finance Minister Arun Jaitley, who chairs the Council, said. The overall impact would not be inflationary, he claimed.
The council came down hard on luxury items, by levying a cess apart from a high tax rate. On tobacco, a cess of 204 per cent has been proposed for pan masala and gutka, while cigarettes not exceeding 65 mm will attract a cess of 5 per cent plus Rs 1,591 per thousand.
The GST will apply on two categories: filter and non-filter cigarettes not exceeding 65 mm and non-filter over 65 mm but les than 70 mm. The first lot will attract a cess of 5 per cent plus Rs 1,591 per 1000 sticks. The second will attract a cess of 5 per cent plus Rs 2,876, for filter cigarettes the levy is 5 per cent plus Rs 2,126 per thousand sticks.
Depending on engine capacity and fuel, small cars will attract 1 per cent to 3 per cent cess, while large cars will attract a cess of up to 15 per cent.
The council will meet on Friday to finalise tax rates of half a dozen items, including gold, agricultural implements, bidis and cigarettes, textiles and footwear, failing which a fresh round of meetings will be called.