GST from July 1: Know how the new tax regime will make these things cheaper

New Delhi: India's new indirect tax regime, Goods and Services Tax (GST), which is scheduled to be rolled out from July 1, will lead to lower tax burden in several commodities including packaged cement, Medicaments, Smart phones, and medical devices, including surgical instruments.

The rollout of GST will bring benefits to the consumers due to reduced tax rates on various commodities such as packaged cement, medicaments, smartphones, and medical devices, etc.

Packaged cement

Packaged cement attracts central excise duty of 12.5% + Rs 125 PMT and standard VAT rate of 14.5%. At these rates, the present total tax incidence works out to more than 29%. If we include tax incidence on account of CST, octroi, entry tax, etc., the present total tax incidence would work out to more than 31%. As against this, the proposed GST rate for cement is 28%.

Medicaments

There will be lesser tax burden in case of Medicaments, including Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systemsalso. Medicaments, in general, attract 6% central excise duty and 5% VAT. Further, CST, octroi, entry  tax, etc. are also applicable in general. At these rates, the present total tax incidence works out to more than 13%. As against this, the proposed GST rate on medicines, including ayurvedic medicines, is 12%.

Smartphones

Smartphone attracts 2% central excise duty [1% excise duty + 1% NCCD]. VAT rates vary from State to State from 5% to 15%. Weighted average VAT rate on smartphones works out to about 12%. Thus, the present total tax incidence on smartphones works out to more than 13.5%. As against this, the proposed GST rate for smart phones is 12%.

Medical devices

Similarly, medical devices, including surgical instruments, in general attract 6% central excise duty and 5% VAT. Along with CST, octroi, entry tax, etc., the present total tax incidence on them works out to more than 13%. As against this, the proposed rate under GST is 12%.

Puja samagri

Puja samagri including havan samagri will be under the Nil category. However, exact formulation for the same is yet to be finalized.