News & Analysis

New GST Rates – Here’s What Gets Costlier and Cheaper

With the new GST rates kicking in from today, here is a quick look at what gets costlier for the consumer and where they can save some money

The new GST rates come into effect today under which several goods and services could put an extra burden on the consumer’s purse. These rate changes were approved by the GST Council to address inverted duty structures as well as to withdraw some time-bound exemptions. 

Finance Minister Nirmala Sitharaman clarified that the tweaks in the GST rates were meant to make up for inefficiencies in the value chain and remove time bound support to some segments of the industry. She clarified that the changes were approved on a unanimous basis by the GST Council and were based on the Fitment Committee’s recommendations. 

 

Here’s a list of what could become costlier: 

  • Single package food items such as cereals, pulses and flour weighing up to 25 kg would henceforth be considered as “pre-packaged and labeled” which means it comes under the purview of a 5% GST. 
  • Items such as curd, lassi and puffed rice would also now attract a GST of 5% when pre-packaged and labeled. 
  • Printing, writing and drawing ink, knives with cutting blades, paper knives, pencil sharpeners and blades, spoons, forks, skimmers and cake servers would attract 18% GST instead of the earlier 12%.
  • LED lamps and solar water heaters would also become costlier as it would now attract a GST of 18%
  • Cut and polished diamonds would be taxed at 1.5% compared to 0.25% earlier resulting a marginal increase in costs
  • Similarly hotel accommodation costing more than Rs.1,000 a day would be taxed now at 12% while non-ICU hospital rooms with rents of above Rs.5,000 a day get a 5% GST. 
  • Use of bank check books and check leaves would become more expensive as it would entail an 18% GST while in the case of maps, atlases and globes you pay 12% GST. 
  • Machines used in cleaning, sorting and grading seeds and grain pulses, milling equipment, wet grinders and air-based atta chakkis will bear GST of 18% as against 5%. These could be handed over to the consumer at the retail end. 
  • Similarly, machines used to clean, sort and grade eggs, fruit and other agri produce, milking machines and dairy machinery saw rates rise from 12% to 18%. 

 

In addition,GST exemptions to some of the services are being withdrawn. These include: 

  • Transportation by rail or a vessel of railway equipment and material 
  • Storage or warehousing of commodities that attract tax such as nuts, spices, jaggery
  • Fumigation in a warehouse for agro produce
  • Services by the RBI, the IRDA, SEBI, FSSAI and GSTN
  • Renting of residential dwelling to business entities 
  • Services provided by cord blood banks by way of stem cell preservation

 

The following becomes cheaper now: 

  • Tax on transport of goods and passengers by ropeways would decline to 5% from 18%.
  • Renting truck/goods carriage where the fuel cost is included will be cheaper as the tax is reduced to 12% instead of 18%.
  • GST rates on medical items like ostomy and orthopedic appliances – splints and other fracture appliances, artificial parts of the body, other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability, and intraocular lens- have come down to 5% from 12%.

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