New GST rates applicable as on July 18

The GST implied on commodities and services contributes significantly to bringing together the entire market. An increase in the rate of GST has been discussed and addressed by the GST council as a means of stabilizing the inefficiencies caused in the value chain. The 47th GST council meeting has made decisions on making amends in the tax rates applied on goods, and services, and is applicable from 18 July 2022. Let’s look into some key takeaways regarding the new GST rates discussed at the GST council meeting.

Effect of GST rates on people

The new GST rates and GST revisions have a huge impact on the lives of common people. Though GST has contributed to replacing multiple central and state tax collections, it has become the source for providing funds for development activities across the country. Although the implementation and amendments of GST rates have minimized tax evasions to an extent, it is crucial to consider the impact and effect of GST on different fields of the economy. According to the GST Council meeting, once the changes are put into effect, the pricing of different items will differentiate them as more expensive and less expensive.

Items that increased in price with revised GST rates

Under many items which have been recommended for the GST ambit, pre-packaged food, and labeled items are included in five percent of GST, eight percent of GST is charged on the issuance of bank cheque book, twelve percent of GST on hotel rooms, five percent of GST without ITC on hospital beds except ICU, twelve percent to eighteen percent GST on LED lights, lamps and also knives. The change in customer preferences over goods and services has also impacted the revision rates of GST. Detailed information is as follows:

• Food products like cereal, pulses, and flour sold in single containers weighing up to 25 kg will be deemed "prepackaged and labelled" and subject to a 5% GST. This also applies to goods like curd, lassi, and puffed rice when they are pre-packaged and labelled.
• Printing, writing, or drawing ink, knives with cutting blades, paper knives, pencil sharpeners and blades, spoons, forks, ladles, skimmers, and cake servers are other products that will cost more as they can attract 18% instead of 12%.
• Solar water heaters and LED lighting will be subject to an 18% tax.
• Instead of 12% GST, Tetra Pak (or aseptic packaging paper) used to package liquid beverages or dairy goods would now be subject to 18% GST.
• Diamonds that have been cut and polished will henceforth be taxed at 1.5% rather than the previous 0.25%.
• Up to Rs 1,000 per day of hotel lodging will now be subject to a 12% tax.
• Non-ICU hospital rooms having rent above Rs 5,000 per day would be subject to a 5% GST.
• The GST rate will be 18% for bank chequebooks and loose leaf checks and 12% for globes, atlases, and maps.
• The rate on "pawan chakki" or air-based atta chakki, wet grinders, machinery used in the milling business, and machinery used to work with grains, pulses, and other items goes rise from 5% to 18%.
• Rates for milking machines and dairy equipment will increase from 12 percent to 18 percent. Rates for machines that clean, sort, or grade eggs, fruit, or other agricultural produce and its parts will also increase.

Items for which prices reduced with revised GST rates

Apart from the hike of GST rates on different commodities, the price range of many items has decreased as well. Various items on which recommendation of GST council has been implemented include ropeway rides, renting on the goods carriage, appliances used for orthopedics, and many more. Only when these items are used frequently might the reduction in pricing in accordance with GST rates have been more beneficial to the average person. This uniformed tax regime and GST council meeting proposals are affecting the daily lives of people both beneficially and adversely. Detailed information is as follows:

• There is a drop from 18% to 5% for tax on goods and passenger transportation by ropeways.
• With a reduction of tax from 18% to 12%, Renting a truck or goods carriage where the cost of fuel is included will be less expensive.
• GST rates on medical items such as intraocular lenses, ostomy, and orthopedic appliances, splints and other fracture aids, artificial body parts, and other aids worn, carried, or implanted in the body to correct a defect or impairment have decreased from 12% to 5%.
• Coaching or training in recreational activities related to the arts, culture, or sports is exempted from tax when they are provided by an individual.

Moreover, the following services are no longer exempt:

• Business entities (registered persons) living in rented residential spaces.
• Services by cord blood banks to preserve stem cells.
• Transportation of railroad equipment and materials by rail or vessel.
• Storage or warehousing of tax-attracting goods (nuts, spices, copra, jaggery, cotton, etc.).
• Fumigation of agricultural produce in a warehouse, services by the RBI, the IRDA, the SEBI, the FSSAI, and GSTN.

The bottom line

Implementation of GST in the country had marked the initiation of unification of taxes along with a scope of increased production with increased competitiveness. While production costs and other factors seem to affect the economy positively, the rise and fall of the price range for goods and services cause a disturbing phase in the lives of many. Though the recommendations of the GST council in the 47th meet are trying to augur well with consumers, it comes with drawbacks as well. Moreover, with an intention of rationalizing the tax structure on goods and services, the revised GST rates have effectively become part of our lives and every individual must abide by these with immediate effect.