The latest release of GST tax slab by the government has declared GST gold tax rate, GST rates on automobiles and other tax rates. Here is a comprehensive look on the impact these rates will create from July 01, 2017.
Impact of GST Rates on Automobile Sector:
The GST tax slab declared by the government has been divided into four parts. Tax slab for small cars, mid-size cars, luxury cars and SUVs. The basic tax rate for all the types of cars is the same i.e. 28% but the government has introduced additional cess over these cars and this basically determines the new tax rate.
For small cars, the cess is 1% for petrol cars (total 29%), 3% for diesel cars (total 31%). For mid-size cars, luxury cars and SUVs, the cess is 15% and the total tax levied will be 43%. This tax structure will have almost minute impact on small cars but the other three types which fit into 43% tax slab will get huge benefit as the present rate is nearly 44-55%.
The government has also given encouragement to electric vehicles where only 12% tax will be charged. The tax for hybrid cars will be 43%, same as that for luxury cars.
Impact on Gold and Jewelry Sector:
The latest release by the government for gold rates shows that the tax levied on gold will be 3% while the present rate is 2%. A lobby of gold experts requested the finance minister to reduce the gold tax rate to 1.25% and was worried about the tax rate before the announcement as the lowest tax slab for GST is 5%. But Arun Jaitely fixed the rate to 3% after several discussions which gave relief to the traders.
Yet many experts say that high rate of tax on jewelry items will make the industry less competitive and traders will try wrong means to do business. They said that higher rate will encourage tax evades, smuggling and money laundering. There has been huge surge in the market after the rate was released and rates of gold have been on the sky.