By delivering consistency and openness, the Goods and Services Tax (GST) has altered the way the Indian taxation system looks. One of the most substantial tax changes ever made, the Goods and Services Taxation System was enacted to stop the older tax system's cascading effects.
GST is gathered at every stage of the supply chain, eradicating the tax on tax or the cascading effect of tax. Businesses have benefited from this paradigm-shifting tax reform in many ways, which have helped them grow their operations and the economy in general.
Since the Goods and Services Tax was implemented, the market has become more competitive, which benefits small and medium-sized businesses. GST has decreased the cost of transportation and made the national market freely available for SMEs for future company development.
Did you know? Under the new GST tax regime, three more months have been added to the GOM on Rate Rationalisation.
What are GST Rates in India?
Several GST tariffs have been set to increase openness and confidence between buyers and sellers in the taxing process. Depending on specific criteria, every one of these slabs contains several types of things.
The GST Council determines these rates. Periodically, this Council updates the rate slab for products and services. Typically, the GST rates are high for luxuries and low for necessities. There are four different GST rates in India for different commodities and services: 5%, 12%, 18%, and 28% GST.
Also Read: GST benefits - 7 Ways One Must Know How GST benefits the Economy
GST Rate Changes from 18th July 2022
On July 13, 2022, the government issued 9 Central Tax Notifications with the numbers 03/2022 through 11/2022. These GST rate adjustments will take effect on July 18, 2022. Additionally, a few basic necessities no longer qualify for exemptions. Revised rates for goods subject to an inverted tax system received official notification.
GST Rate Revision in 47th GST Council Meeting
The 47th GST Committee meeting took place on June 28 and 29, 2022. The following GST rate changes were made, along with the reduction of the exemption list and the adjustment of the inverted tax regime.
Also Read: What was the impact of GST on Real Estate?
Changes in the Inverted Tax Regime
|
Description |
Old Rates |
New Rates |
|
Solar water heaters and systems |
5% |
12% |
|
Prepared, finished, chamois or composition leathers |
5% |
12% |
|
Job work for processing of hides, skins, leather, making of leather products including footwear, and clay brick manufacturing |
5% |
12% |
|
Earthwork works contracts and sub-contracts to the Central and state governments, Union Territories and local authorities |
5% |
12% |
|
Pawan Chakki being air-based atta chakki, wet grinder, cleaning, sorting or grading machines for seeds and grain pulses, and milling machines or cereal making machines, etc; |
5% |
18% |
|
Ink for drawing, printing, and writing |
12% |
18% |
|
Knives with paper knives, cutting blades, pencil sharpeners and its blades, skimmers, cake-servers, spoons, forks, ladles, etc |
12% |
18% |
|
Centrifugal pumps, submersible pumps deep tube-well turbine pumps, bicycle pumps that are power-driven mainly for handling water |
12% |
18% |
|
Milking machines and dairy machinery, cleaning, sorting or grading machines and its parts for eggs, fruit or other agri produce |
12% |
18% |
|
Lights and fixture, LED lamps, their metal printed circuits board |
12% |
18% |
|
Marking out and drawing instruments |
12% |
18% |
|
Services by foreman to chit fund |
12% |
18% |
|
Works contract for railways, metro, roads, bridges, effluent treatment plant, crematorium, etc. |
12% |
18% |
|
Works contract and sub-contract to the Central and state governments, local authorities for canals, dams, pipelines, plants for water supply, historical monuments, educational institutions, hospitals, etc |
12% |
18% |
Refund of accumulated ITC for edible oils and coal is disallowed.
Other Hikes and Cuts in GST Rates
|
Description |
Old Rate |
New Rate |
|
Cut and Polished diamonds |
0.25% |
1.50% |
|
Tetra Pack (Aseptic Packaging Paper) |
12% |
18% |
|
Tar (From coal, or coal gasification plants, or producer gas plants and coke oven plants) |
5%/18% |
18% |
|
Import of Diethylcarbamazine (DEC) tablets free of cost for National Filariasis Elimination Programme (IGST) |
5% |
Nil |
|
Import of particular defence items by private businesses or suppliers for end-consumption of Defence (IGST) |
Applicable rates |
Nil |
|
Ostomy Appliances |
12% |
5% |
|
Orthopedic appliances such as intraocular lens, artificial parts of the body, splints and other fracture appliances, other appliances which are worn or carried, or body implants, to compensate for a defect or disability |
12% |
5% |
|
Transport of goods and passengers by ropeways (with ITC of services) |
18% |
5% |
|
Renting of truck or goods carriage including the fuel cost |
18% |
12% |
Exemptions under GST reduced
|
Description |
Old Rate |
New Rate |
|
Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed |
Nil |
12% |
|
Cheques, lose or in book form |
Nil |
18% |
|
Parts of goods of heading 8801 |
Nil |
18% |
|
Air transportation of passengers to and from north-eastern states and Bagdogra now restricted to economy class |
Nil |
Condition added |
|
Transportation by rail or a vessel of railway equipment and material, storage or warehousing of commodities attracting tax such as copra, nuts, spices, jaggery, cotton, etc, fumigation in a warehouse of agri produce, services by RBI, IRDA, SEBI, FSSAI, and GSTN, renting of residential dwelling to GST-registered businesses, and services by the cord blood banks for preserving stem cells |
Nil |
Applicable rate |
|
Room rent (excluding ICU) exceeding Rs.5,000 per patient day taxed without ITC |
Nil |
5% |
|
Common bio-medical waste treatment facilities for treating or disposing biomedical waste shall be taxed with availability of ITC, like CETPs |
Nil |
12% |
|
Hotel accommodation priced up to Rs.1,000 per day |
Nil |
12% |
|
Training or coaching in recreational activities on arts or culture, or sports other than by individuals |
Nil |
Applicable rate |
|
Petroleum/ Coal bed methane |
5% |
12% |
|
e-Waste |
5% |
18% |
|
Scientific and technical instruments to public funded research institutes |
5% |
Applicable rate |
GST Rate Changes from 1st January 2022
The government increased the goods and services tax on commodities, including clothing, textiles, and footwear. The GST rate for textiles has increased from 5% to 12%, while the tax on the clothing of any price has also increased from 5% to 12%.
GST Rate Revision in 45th GST Council Meeting
The following conclusions on the GST rates were made during the 45th GST Cabinet meeting on September 17th, 2021.
|
Category |
Old Rate |
New Rate |
|
Railway goods, locomotives, and parts |
12% |
18% |
|
Pens |
12% |
18% |
|
Metal concentrates and ores |
5% |
18% |
|
Renewable energy devices |
5% |
12% |
|
Printed material |
12% |
18% |
|
Scrap and plastic waste |
5% |
18% |
GST Rate Revision in 44th GST Council Meeting
The following agreements on the GST rates in force through September 30, 2021, were made during the 44th GST Cabinet meeting, held on June 12th, 2021.
|
Category |
Old Rate |
New Rate |
|
Hand sanitisers |
18% |
5% |
|
Equipment to cheek body temperature |
18% |
5% |
|
Abmulances |
28% |
12% |
|
Testing kits |
12% |
5% |
GST Rate Revision in 43rd GST Council Meeting
- Up to the end of August 2021, relief products exports will not be subject to GST.
- A list of pharmaceuticals that are exempt from GST is also included.
- Until the end of August 2021, any Covid-related relief commodity imported with the aim of giving it to the authorities or any charitable organisation would be free from IGST.
- The finance minister introduced the Amnesty System to cut down on late fee payments. Under this plan, small taxpayers may file GST returns.
GST Rate Revision in the 42nd GST Council Meeting
The meeting's top points are listed here from October 5, 2021.
- Small taxpayers with revenue of under ₹5 crores can now submit quarterly GSTR-3B and GSTR-1 applications, with the 13th day of the month following the quarter serving as the specified deadline for the GSTR-1 application. At the start of 2021, this regulation went into force. This rule's execution has resulted in a decrease in the number of returns from 24 to 8.
- For the first 2 months of the quarter, quarterly taxpayers will have the choice of paying 35% of their total tax obligation from the previous quarter by using automatically issued challan.
- Taxpayers with annual revenue of ₹5 crores or more are required to provide a 6-digit HSN number. Taxpayers having revenue of fewer than ₹5 crores are necessary to provide a 4-digit HSN code.
- Refunds would be sent to bank deposits whose PANs are linked to Aadhaar.
- To promote space launching services within India, the GST will not apply to ISRO, Antrix Corporation, or New Space India Limited.
- Sanitisers that don't include alcohol will continue to be subject to an 18% GST levy.
- The total compensation levy collected up to this point is ₹20,000 crore. By October 5, 2020, this sum had been distributed to particular Indian states.
GST Rate Revision in the 41st GST Council Meeting
On August 27'th, 2020, the Union Minister Of finance presided over the 41st GST Cabinet meeting. In regions where the FRBM Act governs the lending limit, the government would grant an extra 0.5% relaxation, according to the revised assessment. Due to the damage inflicted by the coronavirus pandemic, states are now able to borrow more money.
Also Read: GST Billing Software – Return Filing & Accounting Software
Conclusion:
Prior to the implementation of the GST administration in India, the country's tax system was a patchwork of several separate levies, some of which were imposed locally and caused key challenges as well as corruption. An undesirable tax-on-tax scenario resulted from the preceding tax structure's cascading tax effect, making it difficult to regulate. Confusion resulted from this, and maintaining such a complicated system was expensive.
The GST Council determines the GST tax slabs. The GST Council frequently revises the rate slab for goods and services. Typically, the GST rates are higher for luxuries and low for necessities. There are four different GST rates in India for different commodities and services: 5%, 12%, 18%, and 28% GST. Since the Goods and Services Tax was introduced, the GST Council has altered the GST rates for a number of items. At the 47th GST Council Meeting on June 28, 2022, the most recent rate adjustment went into effect.
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