Know More about the Tax Slabs for Goods and Services in India

The following post is a sponsored post.

Since 1860, the Indian taxation has undergone multiple iterations to meet the requirements of government finances and economic policy. There have been multiple acts to deal with the irregularities in the tax system. The Central Goods and Services Tax Act, 2017 (GST) can be considered another attempt to dissolve the economic disparities and irregularities prevalent in the system.

Tax slabs for goods and services

The 14th Goods and Services Tax Council meeting embarks multiple changes in the tax slabs 2017-18. Rates for goods are pegged at nil, 5%, 8%, 12%, and 28% and compensation cess to be levied on certain goods has been broadly approved. However, healthcare and educational services have been exempted from the purview of GST.

The government has approved tax rates for about 1200 items, of which 19 percent would levy the highest tax rate of 28 percent, putting them in the highest tax bracket, followed by 43 percent in the 18 percent bracket and 17 percent in 12 percent bracket. 7 percent of goods have been exempted and 14 percent will fall in 5 percent tax slab. Thus, 81 percent of items falling under the bracket of 18 percent or below and 19 percent with the highest tax levy of 28 percent.

Manufacturing sector is the major contributor of India’s GDP. With the government initiatives like ‘Make in India’ and ‘Digital India’, it is foreseen to multiply the growth further, keeping the scenario in mind the rates of capital goods, industrial and intermediate items have been set to 18 percent. Many commodities would see reduction because of the cascading tax effects. Common use products, such as food grains, would get cheaper as the council has decided on the service tax. There would be a differentiated tax rate for beverage sector. Telecom sector will be taxed at the same rate as before; however, luxury sector has taken a maximum hit, with highest tax rate of 28%. The tax on gold is still to be decided.

Government is of the opinion that majority of commodities would witness reduction in the tax rates and there would be greater tax ebullience resulting from efficiency. It is also believed that there would be less tax evasion and more transparency. The future is still hazy but GST could be considered another strong measure by the government in the light of tax reforms.

Leave a Reply