New Delhi: The Union Finance Ministry has notified Central GST (CGST) tax rates for goods, which will be effective from September 22.
States will now have to follow suit and notify the State GST (SGST) rates to be levied on goods and services beginning Monday.
Under GST, the revenues are shared equally between the Centre and the states.
Effective Monday, GST will be a two-tier structure, wherein the majority of goods and services will attract tax of 5 and 18 percent.
A 40 percent tax will be levied on ultra luxury items, while tobacco and related products will continue to be in the 28 percent plus Cess category.
Currently, Goods and Services Tax (GST) is levied in 4 slabs of 5, 12, 18 and 28 percent. Besides, a compensation cess is levied on luxury items and demerit or sin goods.
With the reduction in rates on most goods, the onus is now on trade and industry to pass on the benefit of these tax rate changes to consumers and align compliance in a timely manner.
AMRG & Associates Senior Partner Rajat Mohan said by issuing clear schedules in the notification, the government has provided the much-needed clarity on applicable rates across a wide spectrum of goods.
“With this clarity in place, the ball is now in the industry’s court. Businesses must promptly update their systems, revise pricing, and ensure smooth implementation of the new rates across supply chains,” Mohan said.
The success of this reform will depend on how effectively and transparently the industry adopts these revised tax rates, he added.
EY Tax Partner Saurabh Agarwal said that as rate notifications are now being released, it is imperative for industries to align their ERP systems, pricing decisions and supply chain.
“This strategic alignment is critical to ensure a smooth implementation and, crucially, to guarantee that the benefits of this rate rationalisation are effectively passed on to the end consumer,” Agarwal said.
The decision to lower tax rates to benefit the common man was taken by the GST council, comprising the Centre and states, at its meeting on September 3.
