Home / News / India /  Key GST rate changes kick in from today

NEW DELHI : Products like pre-packaged and labelled food items and services like expensive non-intensive care hospital stay are set to attract Goods and Services Tax (GST) from today while the tax outgo on certain medical supplies and transport services are set to come down as a series of decisions by the GST Council takes effect.  

As per this, services provided by clinical establishments by way of room other than intensive, critical care, intensive cardiac care and neonatal intensive care units where the rent levied is more than  5,000 a day will attract a 5% tax. 

Also, a 5% GST will apply on pre-packaged and labelled items like rice, flour, meat and curd as part of efforts to curb alleged tax evasion by businesses using labels without trademarks to take advantage of the tax exemption available to certain food items.  

Specified pre-packaged and labelled commodities (without registered brand name) such as wheat, rice, maize, makhana, specified flours, etc would be liable to 5% GST from 18 July increasing the cost for the customer, explained Saurabh Agarwal, Tax Partner at EY India.  

The rate changes are part of the GST Council’s decision last month to correct the tax anomalies on a host of industries and to expand the tax base while giving relief to some sectors. 

As part of this, the GST rate on items like ostomy appliances used by some patients, orthopaedic equipment like splints and other fracture appliances and artificial parts of the body will come down from 12% to 5%. Also, transport of goods and passengers by ropeways will come down from 18% to 5%, while renting of trucks and goods carriage vehicles where cost of fuel is included, will come down from 18% to 12%. 

Import of diethylcarbamazine tablets is exempted from levy of IGST, if supplied free of cost for National Filariasis Elimination Programme, Central Board of Indirect Taxes and Customs (CBIC) said in a social media post on Sunday. 

The other items on which higher GST rate will apply include printing, writing and drawing ink, knives, spoons and fork and power-driven pumps on which 18% GST will apply from Monday, against the earlier 12%. Certain farm and diary equipment which till now attracted 5% or 12% GST will now attract 18%. Also, solar water heaters and prepared leather will attract 12%, up from 5% till now.  

The rate changes are expected help boost revenue collections and reduce litigation by preventing certain refund claims which get disputed. However, the instances of rate increase could face criticism from opposition parties as it coincides with the beginning of the monsoon session of Parliament. A government official explained to Mint that the changes were made on the recommendation of many states who were losing revenues due to the low rates in the GST regime.


Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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