GST rate changes for the year 2020-2021

Last Updated at: July 17, 2020
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 GST rate changes for the year 2020-2021
In May 2020, Maruti Suzuki India has stated that this is not the right time to seek GST rate cut on automobiles. They said this in view of the fact that the production levels in the industry have been at a record low of late. They have urged the Govt. to consider the rate cut at an appropriate time later.

 

Catalogue for the blog ‘GST rate changes’:

  • What is GST?
  • Components of GST
  • GST rate changes in different parts of the year 2019
  • Evolution of GST

 

The Goods and Services Act, which was passed in the Parliament in 2017, is one of the most significant reforms of India. Its journey began in 2000 when a committee was set up to draft the law. However, it got passed in 2017 in both the Houses. The Goods and Service Tax (GST) means one indirect tax for the entire nation. It has eliminated the tax applied on the taxes, thus decreasing the additional cost on the goods.

Components of GST

There are three types of taxes applied under GST:-

CGST– Collected by Central Government. It is collected on sales happened within a state.

SGST– Collected by State Government. It is collected on sales happened within a state.

IGST– Collected by the Central government. It is collected on sales happened between two states.

GST rate changes in different parts of the year 2019

Since the onset of GST, there have been multiple changes in the GST rates of the various commodities and services. The financial year 2019-20 also saw numerous changes in the GST rates of multiple items. Here are the highlights of the same:-

GST rate changes in the 36th council meeting held at New Delhi on 27th July 2019 

The following are the rate changes for the 36th GST Council meeting:

  1. The GST rates on all-electric vehicles were reduced from 12 % to 5 %.
  2. Also, GST rates on chargers or charging stations for electric vehicles were reduced from 18 % to 5 %.
  3. GST exemption was given to the electric buses (carrying capacity more than 12 passengers) hired by local authorities. 

GST rate changes in the 37th council meeting held at Goa on 20th September 2019 

Given below are the rates revision decided in the 37th GST Council meeting:

Products 

Before 

After 

Parts of Slide Fasteners  18 % 12%
Marine Fuel  0.5 % (FO) 18 % 5 %
Wet Grinders (including stone as grinder) 12 % 5%
Dried Tamarind, Plates and Cups made of leaves/flowers/bark) 5 %  NIL
Cut and Polished semi-precious stones 3 % 0.25 %
Specific goods for petroleum operations taken under HELP)  Applicable rates  5 %
Goods like railway wagons, coaches, rolling stock (without refund of accumulated ITC) 5 % 12 %
Caffeinated Beverages  18 % 28 % + 12 % compensation cess
Polyethylene/polypropylene woven and non- woven bags 5 %/ 12 % / 18 % Uniform 5 % rate
Pulley, wheels and other parts and used as parts of agricultural machinery. 18 % 12 % for the period 1.07.2017 to 31.12.2018
Get Online GST Registration

Specific exemptions were also given to the following:

  • Imports of specific Defence goods not manufactured indigenously up to 2024.
  • Supply of goods and services to the Food and Agriculture Organization for specific projects.
  • Fishmeal for the period 01.07.17 to 30.09.19.
  • Supply of goods and services to FIFA and other persons for organizing under-17 Women’s Football World Cup.
  • Supply of Silver/Platinum by specified nominated agency to exporters for exports of Jewellery.

Specific exemptions were also given to the following:

  • Imports of specific Defence goods not manufactured indigenously up to 2024.
  • Supply of goods and services to the Food and Agriculture Organization for specific projects.
  • Fishmeal for the period 01.07.17 to 30.09.19.
  • Supply of goods and services to FIFA and other persons for organizing under-17 Women’s Football World Cup.
  • Supply of Silver / Platinum to Jewellery exporters by a designated approved entity.

GST rate changes in the 38th GST council meeting held at New Delhi on 18th December 2019

Under the guidance of the Union Minister for Finance and corporate affairs Smt. Nirmala Sitharaman, the following exemptions in GST were announced:- 

  • From 1 January 2020, an individual with 20 per cent or more ownership of central or state government will be exempted from the upfront sum payable for a long-term lease of industrial/financial assets plots. Earlier, this referred only to certain institutions with 50 per cent or more control of the central or state government.
  • From 1st march 2020, a single GST rate would be applicable on @28 % on both State-run and state-authorized lotteries. 
  • From 1st January 2020, a uniform GST rate of 18 % would be applicable on all woven and non- woven bags and sacks of polyethelene or polypropylene strips or the like, whether laminated or non-laminated of a kind used in the packing of goods (HS code 3923/6305). 

Various GST Tax Slabs in India 2020

Below are the 4 types of GST rates in India:

GST Tax Slab of 5%

Under this slab, the goods are covered with basic amenities such as agarbatti, ayurvedic medicines, cashew nuts, coal, coffee, dry sliced mango, fertilizers, fish fillet, handmade carpets, oil, spices, sweet sugar, tea, oil, lifeboats, life-saving drugs and unbranded namkeen.

This slab includes services like railways, airlines, delivery food, AC and non-AC restaurants, tariff-free hotel rooms within Rs. 7,500 and unique pilgrim flights.

GST Tax Slab of 12%

This slab includes items such as mobile phones, sewing machine, jewellery box, umbrella. The slab also has packaged products such as frozen meat, fruit juices, cheese and other dairy products.

The facilities under this slab include airline fares for business class and fares for the movies under Rs. 100.

GST Tax Slab of 18%

Behind this slab item, such as ice cream, detergent, hair gel, hair oil, pasta, protective glass, baked goods, mineral water, oil powder, water heaters, washer and dryer, laundry soap, perfume sprays, leather shoes, cookers, utensils, goggles, fake flowers, luxury watches, luggage, suitcase, after-shave, furniture, office supplies, mattress monitors, tv monitor video games and lithium-ion batteries.   

The services covered by this slab include hotel restaurants whose duties are over Rs 7,500, real hotel bills below Rs 7,500 and film tickets over Rs 100.

GST Tax Slab of 28%

 Over 200 items are protected under this slab such as cars, tobacco, sturdy household goods, high-end bikes, pan masala, measuring machine etc.

Within this slab, the services involve racing, casino gaming, the real hotel bill remaining over Rs. 7,500.

On semi-polished and cut stones a special rate of 0.25 per cent is levied.

No tax Applicable on Goods and Services

The government doesn’t regulate GST on certain products and services. Those include:

Goods: Rakhis lacking valuable stones, salt, bread, towels, raw material, eggs, flour, wheat, organic honey, curd, sindoor, publications, rock idols, eyeliner, oat, picture books, manuscripts etc.

Services: Hotels and tariff lodges below Rs. 1,000, plus IMM textbooks, bank charges for savings account etc.

Evolution of GST 

The table below shows a comparative study of the revenue trends GST structure, and the reduction in GST rates since the initiation of GST.

  • The government initially calculated the GST rates on RNR basis.
  • Several items rates were lower than RNR rates.
  • Items placed under 28% slab had pre- GST incidence over 31 %.
  • GST for items like toothpaste, mineral water, soap etc. are at 18 % slab.
  • The threshold limit increased to Rs. 40 lakhs in goods.
  • The composition limit increased from Rs. 75 lakhs to Rs. 1.5 crore.
  • The law has lowered the composition rates from 12% to 1% for the manufacturers.
  • The law has extended the composition scheme to services too.
0

 GST rate changes for the year 2020-2021

916
In May 2020, Maruti Suzuki India has stated that this is not the right time to seek GST rate cut on automobiles. They said this in view of the fact that the production levels in the industry have been at a record low of late. They have urged the Govt. to consider the rate cut at an appropriate time later.

 

Catalogue for the blog ‘GST rate changes’:

  • What is GST?
  • Components of GST
  • GST rate changes in different parts of the year 2019
  • Evolution of GST

 

The Goods and Services Act, which was passed in the Parliament in 2017, is one of the most significant reforms of India. Its journey began in 2000 when a committee was set up to draft the law. However, it got passed in 2017 in both the Houses. The Goods and Service Tax (GST) means one indirect tax for the entire nation. It has eliminated the tax applied on the taxes, thus decreasing the additional cost on the goods.

Components of GST

There are three types of taxes applied under GST:-

CGST– Collected by Central Government. It is collected on sales happened within a state.

SGST– Collected by State Government. It is collected on sales happened within a state.

IGST– Collected by the Central government. It is collected on sales happened between two states.

GST rate changes in different parts of the year 2019

Since the onset of GST, there have been multiple changes in the GST rates of the various commodities and services. The financial year 2019-20 also saw numerous changes in the GST rates of multiple items. Here are the highlights of the same:-

GST rate changes in the 36th council meeting held at New Delhi on 27th July 2019 

The following are the rate changes for the 36th GST Council meeting:

  1. The GST rates on all-electric vehicles were reduced from 12 % to 5 %.
  2. Also, GST rates on chargers or charging stations for electric vehicles were reduced from 18 % to 5 %.
  3. GST exemption was given to the electric buses (carrying capacity more than 12 passengers) hired by local authorities. 

GST rate changes in the 37th council meeting held at Goa on 20th September 2019 

Given below are the rates revision decided in the 37th GST Council meeting:

Products 

Before 

After 

Parts of Slide Fasteners  18 % 12%
Marine Fuel  0.5 % (FO) 18 % 5 %
Wet Grinders (including stone as grinder) 12 % 5%
Dried Tamarind, Plates and Cups made of leaves/flowers/bark) 5 %  NIL
Cut and Polished semi-precious stones 3 % 0.25 %
Specific goods for petroleum operations taken under HELP)  Applicable rates  5 %
Goods like railway wagons, coaches, rolling stock (without refund of accumulated ITC) 5 % 12 %
Caffeinated Beverages  18 % 28 % + 12 % compensation cess
Polyethylene/polypropylene woven and non- woven bags 5 %/ 12 % / 18 % Uniform 5 % rate
Pulley, wheels and other parts and used as parts of agricultural machinery. 18 % 12 % for the period 1.07.2017 to 31.12.2018
Get Online GST Registration

Specific exemptions were also given to the following:

  • Imports of specific Defence goods not manufactured indigenously up to 2024.
  • Supply of goods and services to the Food and Agriculture Organization for specific projects.
  • Fishmeal for the period 01.07.17 to 30.09.19.
  • Supply of goods and services to FIFA and other persons for organizing under-17 Women’s Football World Cup.
  • Supply of Silver/Platinum by specified nominated agency to exporters for exports of Jewellery.

Specific exemptions were also given to the following:

  • Imports of specific Defence goods not manufactured indigenously up to 2024.
  • Supply of goods and services to the Food and Agriculture Organization for specific projects.
  • Fishmeal for the period 01.07.17 to 30.09.19.
  • Supply of goods and services to FIFA and other persons for organizing under-17 Women’s Football World Cup.
  • Supply of Silver / Platinum to Jewellery exporters by a designated approved entity.

GST rate changes in the 38th GST council meeting held at New Delhi on 18th December 2019

Under the guidance of the Union Minister for Finance and corporate affairs Smt. Nirmala Sitharaman, the following exemptions in GST were announced:- 

  • From 1 January 2020, an individual with 20 per cent or more ownership of central or state government will be exempted from the upfront sum payable for a long-term lease of industrial/financial assets plots. Earlier, this referred only to certain institutions with 50 per cent or more control of the central or state government.
  • From 1st march 2020, a single GST rate would be applicable on @28 % on both State-run and state-authorized lotteries. 
  • From 1st January 2020, a uniform GST rate of 18 % would be applicable on all woven and non- woven bags and sacks of polyethelene or polypropylene strips or the like, whether laminated or non-laminated of a kind used in the packing of goods (HS code 3923/6305). 

Various GST Tax Slabs in India 2020

Below are the 4 types of GST rates in India:

GST Tax Slab of 5%

Under this slab, the goods are covered with basic amenities such as agarbatti, ayurvedic medicines, cashew nuts, coal, coffee, dry sliced mango, fertilizers, fish fillet, handmade carpets, oil, spices, sweet sugar, tea, oil, lifeboats, life-saving drugs and unbranded namkeen.

This slab includes services like railways, airlines, delivery food, AC and non-AC restaurants, tariff-free hotel rooms within Rs. 7,500 and unique pilgrim flights.

GST Tax Slab of 12%

This slab includes items such as mobile phones, sewing machine, jewellery box, umbrella. The slab also has packaged products such as frozen meat, fruit juices, cheese and other dairy products.

The facilities under this slab include airline fares for business class and fares for the movies under Rs. 100.

GST Tax Slab of 18%

Behind this slab item, such as ice cream, detergent, hair gel, hair oil, pasta, protective glass, baked goods, mineral water, oil powder, water heaters, washer and dryer, laundry soap, perfume sprays, leather shoes, cookers, utensils, goggles, fake flowers, luxury watches, luggage, suitcase, after-shave, furniture, office supplies, mattress monitors, tv monitor video games and lithium-ion batteries.   

The services covered by this slab include hotel restaurants whose duties are over Rs 7,500, real hotel bills below Rs 7,500 and film tickets over Rs 100.

GST Tax Slab of 28%

 Over 200 items are protected under this slab such as cars, tobacco, sturdy household goods, high-end bikes, pan masala, measuring machine etc.

Within this slab, the services involve racing, casino gaming, the real hotel bill remaining over Rs. 7,500.

On semi-polished and cut stones a special rate of 0.25 per cent is levied.

No tax Applicable on Goods and Services

The government doesn’t regulate GST on certain products and services. Those include:

Goods: Rakhis lacking valuable stones, salt, bread, towels, raw material, eggs, flour, wheat, organic honey, curd, sindoor, publications, rock idols, eyeliner, oat, picture books, manuscripts etc.

Services: Hotels and tariff lodges below Rs. 1,000, plus IMM textbooks, bank charges for savings account etc.

Evolution of GST 

The table below shows a comparative study of the revenue trends GST structure, and the reduction in GST rates since the initiation of GST.

  • The government initially calculated the GST rates on RNR basis.
  • Several items rates were lower than RNR rates.
  • Items placed under 28% slab had pre- GST incidence over 31 %.
  • GST for items like toothpaste, mineral water, soap etc. are at 18 % slab.
  • The threshold limit increased to Rs. 40 lakhs in goods.
  • The composition limit increased from Rs. 75 lakhs to Rs. 1.5 crore.
  • The law has lowered the composition rates from 12% to 1% for the manufacturers.
  • The law has extended the composition scheme to services too.
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