ACs, Packaged Food, Butter, Cement, Motorcycles May Become Cheaper With GST Rate Revision

The Prime Minister had proposed a GST rate revision to two slabs at 18 per cent and 5 per cent by Diwali.

“As per the current proposals, the GST rates of products now taxed at 12 per cent may be lowered to 5 per cent and some of them in the 28 per cent tax bracket may come down to 18 per cent. However, sin goods, including aerated drinks, and tobacco products as well as categories like online gaming, lottery, gambling, horse racing and certain luxury cars are likely to be taxed higher,” said Abhishek Jain, Partner and National Head, Indirect Tax, KPMG.

The products currently taxed at 12 per cent include packaged and processed food items, namkeens, soya milk, butter, ghee, cheese, almonds, hazelnuts, dates, figs, condensed milk, processed fruits, sugar confectionery, ready-to-eat vegetables, packaged coconut water, fruit juice, pickles, jellies and jams.

Air coolers, umbrellas, textile products and leather products priced above Rs 1000, building bricks, kitchenware, solar power-based devices, contact lenses and spectacle lenses, coir products, toys, carpets, pencils and crayons also come under this bracket. These products are likely to become cheaper with a 5 per cent tax rate.

Products and services coming under the 28 per cent tax bracket include cement, large motor vehicles, premium motorcycles, air conditioners, and insurance premium. The tax rates of these products also are likely to come down to 18 per cent. However, luxury and sin goods may probably retain the rate or may be taxed higher.

“In consumer durables, different products have different tax rates. Currently ACs are taxed at 28 per cent and other appliances such as refrigerators, washing machines, microwaves already have 18 per cent GST. Once the rates are finalized, we will pass on the tax benefits to the consumer,” said Kamal Nandi, business head and EVP, Godrej Appliances.