New GST Rates and its Effect on the Prices of Goods and Services in India

You know that GST is indirect tax. It is given by seller but its burden has shifted to buyer. So, if the buyer is dealer who  receives goods at higher rate, he will surely sell it at higher price to the final consumer.


 For example,

 If GST is 10%

 and manufacture sells goods to wholesaler. Wholesaler will get it at RS. 100 + RS. 10 = Rs. 110 and wholesaler will sell to final consumer if profit margin is 10% and GST is 10%

110+  Rs. 11 ( Profit ) = RS. 121

RS. 121 + Rs. 12.10 = Rs. 131.10


If GST is 20%, then 

Wholesaler will get it at RS. 100 + RS. 20 = Rs. 120

Wholesaler will increase his profit margin because more money will block in stock. He will loss his interest which he can earn from FD if he does not invest in stock. So, now, he may fix profit margin 15%

 wholesaler will sell to final consumer if profit margin is 15% and GST is 20%


Rs. 120 +  Rs. 18 = Rs. 138

Rs. 138 + Rs. 27.60 =  RS. 165.60

You can see if GST is 10%, final consumer receives goods at Rs. 131.10 and if GST is 20%, final consumer will receive same goods at Rs. 165.60. It means, he has to pay more Rs. 34.50 of same goods.

Now, come and check our current GST rates which had declared on 18th May 2017 in India.


Exempted from GST 

All most all the basic needs are free of GST.


1. Not all Dairy Products are not free from GST.

• Only milk, 
• Curd,
•  Jaggery (Gur), 
• Lassi, 
• unpacked Paneer

 are free from GST. So, there will no effect of GST on these items.

2. Fresh Fruits & Vegetables are also free from GST

Food Items 

1. Natural Honey
2.  Flour (Atta & Maida),
3. Pulses,
4. Basmati Rice
5.  Gram Flour (Besan)
6.  Bread, Vegetable Oil
7. Religious Sweets (Prasad)
8.  Common Salt

3. Cosmetics & Accessories 

1. Bindi, 
2. Vermillion (Sindoor), 
3. Bangles

Stationery 

1. Stamps,
2.  Judicial Papers
3. Printed Books
4.  Newspapers

Handloom Products

Textile 

1. Jute
2.  Silk
3. Contraceptives

 Services

1. Hotel Services priced at less than INR 1000
2. Education (exemption continued from before)
3. Healthcare (exemption continued from before)

Goods and Services with 5% GST 


Goods

Some Dairy Products will be costly now due to charging of GST 5% on these items.

1. Skimmed Milk Powder
2. Milk food for babies
3.  Condensed milk
4. Packaged Paneer
5. Cream

Frozen Vegetables

Food Items 

1.  Sugar
2. Spices
3. Edible Oil
4. Rusk
5.  Sweets

Beverages –

1.  Coffee
2. Tea
3. Juices

Apparel – 

below 1000 INR

Footwear – 

below 500 INR

Fuel –

1.  Kerosene
2.  LPG
3.  Coal
4. Solar Panels

Common Utilities – Broom
Medical Goods –

1.  Medicines
2. Stents

Newsprint
Lifeboats
Textile –

1.  Cotton 
2. Natural Fibre 
3. yarns

Services

1. Railway Travel
2. Economy Class Air Travel
3. Cab Aggregators (e.g. Uber & Ola)

Goods and Services  with 12% GST 

Goods

Dairy Products –

1. Butter
2. Cheese
3. Ghee

Packaged Dry Fruits

Food Items –

1. Snacks (Namkeen & Bhujia)

           Beverages – 

1. Fruit Juices
2. Packed Coconut Water

Apparel –

 above 1000 INR

Personal Hygiene –

 Tooth Powder

Stationery –

1. Colouring Books
2. Picture Books

Common Utilities –

1. Sewing Machine
2.  Umbrella

Ayurvedic Medicine

Incense Sticks (Agarbatti)

Mobile Phones

Goods and Services with 18% GST 

Goods

Dairy Products –

1.  Ice Cream

Preserved Vegetables

Food Items – 

1. Flavoured refined sugar, 
2. Pasta
3. Corn Flakes
4. Pastries
5.  Cakes
6.  Jams
7.  Sauces
8. Soups
9. Instant Food Mixes
10. Processed Foods

Beverages –
Mineral Water

Branded Garments

Footwear – above 500 INR

Personal Hygiene –

1. Tissues
2. Toilet Paper
3.  Hair Oil
4. Soap Bars
5. Toothpaste

Stationery –

1. Note Books
2. Envelopes
3. Fountain Pens

Electronic Equipment –

1.  Printed Circuits
2. Monitors

Iron & Steel Products
Biri wrapper leaves (Tendu Patta)
Biscuits
Textile – Man-made fibre and yarn

Services

1. AC Hotels & Restaurants
2. Telecom Services
3. IT Services
4. Financial Services
5. Works Contract

Goods and Services with 28% GST 

Goods

Food Items

1. Chocolates
2. Chewing Gum
3. Custard Powder

Beverages 

Aerated Water

Personal Hygiene 

1. Deodorants
2. Shaving Cream
3. After Shave
4. Hair Shampoo
5. Dye
6. Sunscreen, 
7. Perfume
8. Face Creams
9. Detergents

White Goods

1. Vacuum Cleaner
2. Shavers, Hair Clippers
3. Washing Machines
4. Dish Washers, 
5. Water Heaters 
6.  Home Appliances
7. Speakers
8. Cameras

Automobiles & Motor Vehicles*

Housing Materials

1. Paint
2. Wallpaper
3. Ceramic Tiles
4. Cement
5. Weighing Machines
6. Vending Machines
7. ATM

Fireworks

Luxury / Demerit Goods* – Pan Masala, Tobacco, Bidis, Aerated Drinks & Motor Vehicles

Services

1. Rooms and Restaurants in 5-star hotels
2. Race course betting
3. Cinema etc.

*Note – Luxury / Demerit Goods as listed above will also attract a compensation cess over and above the GST rate of 28%

Which item will be Costly 

1. Internet and Mobile Recharge bill will increase because GST has become 18%  on telecom and IT services. but past service tax was 15% 
3. Renewal premium for life insurance policies will be costly because now GST on  Financial service is 18% 
4. Banking and investment management services  will be costly because now GST on  Financial service is 18% 
5. WIFI and DTH services, online booking of tickets may become costlier as well  because GST has become 18%  on telecom and IT services. but past service tax was 15% 
6. Railway ticket may be costly because now railway travel service will have 5% GST. 
7. Notebook will be costly due to 18% GST on it. 

Which item will be Cheap

For common man, all basic item, milk, vegetables, salt and clothes from jute are free from GST.