New Delhi: With Goods and Services Tax (GST) regime completing four years, the Union Finance Ministry has said that tax rates on essential items like hair oil, toothpaste, and water heaters have come down in comparison to tax rates during the non-GST regime. In a series of tweets on Wednesday, the ministry claimed that the average tax rate has come down to 11.6 per cent from 14.4 per cent in May 2017.
Widely hailed as the one of the biggest ever tax reforms, GST was introduced in India on 1 July 2017 with the intent of bringing the country under the ‘One nation, one tax’ regime. According to the ministry, GST has achieved better tax compliance through mitigation of tax cascading, double (multiple) taxation, and lower tax burden. The GST regime has also improved the competitiveness of domestic industries in international market by removing hidden and embedded taxes.
Overall, GST rates have been reduced on 400 goods and 80 services.
Details of reduced tax rates on various items -
Common-use items such as hair oil, toothpaste, and soap have seen their tax rates come down from 29.3% in the pre-GST era to just 18% under GST.
Appliances such as fridges, washing machines, vacuum cleaners, food grinders and mixers, shavers, hair clippers, water heaters, hair dryers, electric smoothing irons, TVs (up to 32 inches) have all seen tax rates lowered from 31.3% to 18% due to GST.
The tax on cinema tickets, earlier anywhere between 35% to 110%, has been brought down to 12% (where ticket rate is up to Rs 100) and 18% in the GST regime.
Most items of daily use are in the zero or 5% slab. The construction of residential complexes saw a steep reduction in rates to 5% in general and 1% for affordable houses. Restaurants were also brought down to 5%.
Substantial concessions have been extended to the agriculture sector in GST. On fertilisers, the net tax incidence was halved in GST. On agricultural machineries, the tax incidence has come down significantly from 15% / 18% to 12% and on certain items from about 8% to 5%.
The pre-GST tax incidence on chemical fertilisers was above 10%. (1% excise duty, 2.44% embedded excise duty, about 4% weighted average VAT and 2.5% CST, Octroi, etc.) while in the GST regime all types of chemical fertilisers only attract a 5% tax rate.
Cattle feed, aquatic feed and poultry feed have all been kept at a Nil rate in GST, as have all kinds of seeds. In other words, these vital inputs in the agricultural process do not attract any tax under the GST system.
Read More: GST Council slashes taxes on Covid-19 drugs, retains 5% rate on vaccines
