GST implemented in India – GCC awaits VAT

GST regime explained - as best

DUBAI 2 July 2017: Social media channels relating to India and the Indian diaspora have erupted into a frenzy over the implementation of the new Goods and Services Tax (GST) from the start of this month.

The Value Added Tax (VAT) is set to roll into the GCC from the beginning of 2018. India’s GST implementation will be of interest.

In India, web pundits have been analysing, extrapolating and commenting on what it means and what not. Ordinary Indians are trying to make sense of the information overload.

The Indian government insists it has simplified the tax regime, but many are fearful of change. They are concerned about a double whammy or at the very least a reduction in the surplus purchasing power.

To explain the confusion, we have reproduced just one message from social media: “Friends – Do not make payment of utility bills like Telephone, Electricity, Gas, Mobile etc by Credit Card from now. You will be paying GST twice, once for the service, second on the credit card amount. Use cash or Internet banking. Share this information.”

Whether it is true or not, we – like many others – do not know.

According to Economic Times, a large number of items are under 18% tax slab. The government categorised 1,211 items under various tax slabs.

Gold and rough diamonds do not fall under the current rate slab ambit and will be taxed at 3% and 0.25% respectively.

Emirates News trawled the web to try and find a source that could make sense of the new GST regime. We came upon what we consider a simple and easy explanation of what has come under the ambit of GST. Below is what is, more or less being reported, but we cannot vouch for the absolute veracity of the information provided by WC, the author firm. Readers are advised to confirm the information before taking any action.

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According to Economic Times there is no tax (0%) on Goods: No tax will be imposed on items like jute, fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, bones and horn cores, bone grist, bone meal, etc.; hoof meal, horn meal, Cereal grains hulled, Palmyra jaggery, Salt – all types, Kajal, Children’s’ picture, drawing or colouring books, Human hair. Services: Hotels and lodges with tariff below Rs 1,000, Grandfathering service has been exempted under GST. Rough precious and semi-precious stones will attract GST rate of 0.25 per cent.

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According to Economic Times there is 5% tax on Goods:  such as fish fillet, Apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats, Cashew nut, Cashew nut in shell, Raisin, Ice and snow, Bio gas, Insulin, Agarbatti, Kites, Postage or revenue stamps, stamp-post marks, first-day covers. Services: Transport services (Railways, air transport), small restraurants will be under the 5% category because their main input is petroleum, which is outside GST ambit.

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According to Economic Times there is 12% tax on Goods: Apparel above Rs 1000, frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, cellphones, Ketchup & Sauces, All diagnostic kits and reagents, Exercise books and note books, Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs, Spectacles, corrective, Playing cards, chess board, carom board and other board games, like ludo. Services: State-run lotteries, Non-AC hotels, business class air ticket, fertilisers, Work Contracts will fall under 12 per cent GST tax slab.

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According to Economic Times there is 18% tax on Goods like footwear costing more than Rs500, Trademarks, goodwill, software, Bidi Patta, Biscuits (All catogories), flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors, Kajal pencil sticks, Headgear and parts thereof, Aluminium foil, Weighing Machinery [other than electric or electronic weighing machinery], Printers [other than multifunction printers], Electrical Transformer, CCTV, Optical Fiber, Bamboo furniture, Swimming pools and padding pools, Curry paste; mayonnaise and salad dressings; mixed condiments and mixed seasonings. Services:
AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST, Room tariffs between Rs 2,500 and Rs 7,500, Restaurants inside five-star hotels.

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According to Economic Times there is 28% tax on Goods like Bidis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use, will attract 28 % tax – the highest under GST system. Services: Private-run lotteries authorised by the states, hotels with room tariffs above Rs 7,500, 5-star hotels, race club betting, cinema will attract tax 28 per cent tax slab under GST

By Eudore R. Chand