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Comparative Analysis Of GST Rates With Prevailing Tax Rates On Important Commodities

1. 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%.
2. Medicaments, including Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systems: 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%.

3. Smart phones: Smart phone 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 smart phones works out to about 12%. Thus. the present total tax incidence on smart phones works out to more than 13.5%. As against this, the proposed GST rate for smart phones is 12%.

4. Medical devices including surgical instruments: 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%.

5. Puja samagri including havan samagri: These goods will be under Nil category. However, exact formulation for the same is yet to be finalised.

6. Sugar: Sugar attracts specific central excise duty of Rs.71 per quintal plus Sugar Cess of Rs.124 per quintal, which translates to ad valorem rate of more than 6%. Including incidence on account of account of CST, octroi, entry tax, etc., the present total tax incidence would work out to more than 8%. As against this, the proposed GST rate on sugar is 5%.

7. Tea and coffee (other than instant coffee): Tea and coffee attract Nil central excise duty and VAT rate of 5%. Considering embedded taxes in production of tea and coffee and the incidence on account of CST, octroi, entry tax, etc. the present total tax incidence works out to more than 7%. As against this, the proposed GST rate for tea and coffee (other than instant coffee) is 5%.

8. Milk powder: Milk powder attracts Nil central excise duty and 5% VAT. Considering embedded taxes in production of milk powder and the incidence on account of CST, octroi, entry tax, etc. the present total tax incidence works out to more than 7%. As against this, the proposed GST rate on milk powder is 5%.


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