GST Rate Hike: With effect from July 18, 2022, which is Monday, prices of several items including pre-packaged food items are witnessing an increase as the government has decided to bring them under the ambit of Goods and Services Tax or GST.
The GST Council in its 47th meeting had unanimously decided to hike rates on several daily essential items. The new rates of GST on these items will be applicable from today.
The tax department has said that a single package of food items weighing 25 kg such as cereals, pulses and flour will be treated as ‘prepackaged and labeled’, and will be liable to 5 per cent GST with effect from July 18.
Tax department issues clarification on GST Rate Hike
CBIC (Central Board of Direct Taxes) issued a set of frequently asked questions (FAQs) on the implementation of GST on ‘pre-packaged and labeled’ goods on Sunday night, just a day before the implementation of five per cent GST on such items.
In respect of food articles (such as cereals like pulses, rice, wheat, flour etc.), the supply of specified pre-packaged food items falls within the definition of ‘pre-packaged commodity’ under the Legal Metrology Act. 2009, if such pre-packaged and labeled packages contain a volume of up to 25 kg (or 25 litres).
The board also said that GST would be applicable on a package that includes multiple retail packages, for example a package containing 10 retail packs of 10 kg of flour, the CBIC said.
It states that for the purpose of GST, pre-packaged goods shall mean an article which, without the presence of the purchaser, is put in a package of any nature, whether sealed or not, so as to have a pre-determined quantity of the product contained therein.
Any such supply which requires declaration under the Legal Metrology Act will attract GST.
GST Rate Hike: What Has Been Costly?
Under the Legal Metrology Act, pre-packaged and pre-labeled retail packs, including pre-packaged, pre-labeled dahi, lassi and butter milk, will now attract GST at the rate of 5 per cent, as against their previous exemption status is opposite.
Pulses, cereals such as rice, wheat, flour and such other goods, weighing 25 kg or less than 25 liters, will also attract GST at the same rates. The new GST rate of 5 per cent will also be applicable on packages containing 10 retail packs of 10 kg flour.
Archit Gupta, CEO and Founder, Clear told to media, “The exemption on pre-packaged items was withdrawn to monitor branded suppliers/manufacturers who evade registration and exempted goods from GST without labeling.”
In addition, hospital room rent (excluding ICU) will be charged to an amount of 5 per cent for ITC room without exceeding Rs.5000 per day per patient. Earlier, this item was exempt from Advertisement Service Tax (GST).
The GST Council also decided to bring hotel rooms under the 12 per cent GST slab under Rs 1,000 per day as opposed to the tax exempt category at present.
In addition, 18 per cent GST will be levied on charges charged by banks for issuance of checks (loose or booked form), up from 12 per cent earlier, the GST Council has informed.
The prices of LED lights, fixtures, and LED lamps may see a hike in prices as the GST Council has recommended a reform in the inverse duty structure from 12 per cent to 18 per cent.
What becomes cheaper after the GST rate revision?
IGST on specified defense goods imported by private entities/vendors, when the end users are defense forces, are exempted from GST.
In addition, the transport of goods and passengers through ropeways will become cheaper, with the GST Council reducing the GST rates from 18 per cent to 5 per cent.
Freight fare with operators where fuel cost is included in the consideration will attract 12 per cent GST, from 18 per cent earlier.
In addition, GST rates on items including splints and other fracture devices will be reduced from 12 per cent to 5 per cent; body prostheses; other devices that are worn or carried, or implanted in the body, to compensate for a defect or disability; Intraocular lens.