30 June 2017

GST from 1 July – Rate of tax and exemptions notified

With new Goods and Services Tax (GST) set for launch today at mid-night (30th of June-1st of July, 2017), the Indian government has notified set of notifications to specify the rate of tax on goods and services. These notifications issued under Central GST Act, Integrated GST Act and Union Territory GST Act, also cover number of exemptions for both goods and services which were approved by the GST Council earlier this month.


GST on goods

GST rates for goods have been provided under various Schedules under the relevant notifications specifying rate under six slabs – 5%, 12%, 18%, 28%, 3% and 0.25%. While most of the manufactured goods fall under 18% levy, food items generally will be liable to tax at the rate of 5% (2.5% CGST plus 2.5% SGST, in case of intra-state sale).

Rate Schedules for goods mention Chapter Number and Heading at 4 digit level, though for a few items even 6 and 8 digits are also mentioned. It may be noted that HSN number of the product (upto 4 digit level) will be required to be mentioned in the invoice in case of supply of goods.

  • Schedule - I of the notifications in respect of goods (under CGST, IGST and UTGST) cover some 263 headings which will be liable to CGST/UTGST @ 2.5% or IGST of 5%.
  • Schedule - II covers goods falling under 243 Headings which will be liable to CGST/UTGST at the rate of 6% (IGST @ 12%).
  • Schedule - III has goods falling under 452 Headings which are liable to CGST/UTGST at the rate of 9%.
  • Schedule - IV covers goods under some 228 Headings, and lottery to be taxed at the rate of 14% CGST/UTGST (28% IGST).
  • Schedules - V & VI contain gold, silver, precious stones, etc., which are to be taxed at the rate of 1.5% CGST/UTGST, and unworked diamonds, precious/semi-precious stones and Synthetic or reconstructed precious or semi-precious stones liable to tax at the rate of 0.125% CGST/UTGST.

According to Schedule III, goods not specified under any of the schedule are to be taxed at 9% under CGST/UTGST or 18% under IGST. Further, with equal amount of SGST, the total applicable rate will be twice in case of CGST and UTGST. Some of the important products covered under various schedules are,

  • Iron and steel, copper, aluminium goods mostly covered under 9% CGST slab (with SGST total GST rate will be 18%)
  • Food products mostly covered under 2.5% rate of CGST (with SGST total GST rate will be 5%)
  • Machinery, including electric machinery liable to 9% CGST (with SGST total GST rate will be 18%)
  • Cement, marble, tobacco products liable to 14% CGST (with SGST total GST will be 28%)
  • Air-conditioners, refrigerators, washing machines, liable for 14% CGST (with SGST total GST rate will be 28%)
  • Motor vehicles for transport of goods or persons, including parts and accessories covered under 14% CGST slab (with SGST total GST rate will be 28%)

Further, goods such as milk, pasteurised milk, curd, lassi, buttermilk, rice /wheat/oats/maize (other than put up in unit container and bearing registered brand name), jaggery, salt, printed books, raw silk, specified jute fibres, specified agricultural implements, weaving machinery (handloom), hearing aids, slate, pencils, chalk sticks, specified puja items and other goods described in the schedule appended to Notification No. 2/2017-Central Tax (Rate), are exempt from CGST. Similar exemption from SGST will be available under respective SGST notifications.


GST rate for services

CGST rates for services are also under slabs of 2.5%, 6%, 9% and 14% (with SGST the rates will be twice – 5%, 12%, 18% and 28% respectively, which is equal to IGST). Some of the important services and their rates are,

  • Transport of goods by GTA - 2.5%, subject to conditions
  • Construction of a complex, building, civil structure or a part thereof, intended for sale to a buyer, wholly or partly. [Value of land /undivided share to be excluded – one third of total value deemed to be land value] - 9%
  • Composite supply of Works Contract - 9%
  • Supply of food or drinks in outdoor catering - 9%
  • All other services not specified elsewhere - 9%

Further, exemption for supply of services provided Intra-State like services provided by government as per Constitutional obligations, renting of residential dwelling for use as residence, conduct of religious ceremony, renting of precincts of religious place, accommodation services where declared tariff is less than Rs. 1000 per day, air transport for passengers in North Eastern States, transport of passengers by non AC stage carriage, railways (other than first class and AC coach), metro, metered cab and other specified services, are also available vide Notification No. 12/2017- Central Tax (Rate).


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