Sugar, tea, coffee and milk to cost less under GST

The Goods and Services Tax (GST), proposed to be rolled out from 1 July, would have a lesser impact on the prices of daily essentials such as tea, coffee (except instant tea) and milk powder as the incidence of GST will be lesser than the prevailing taxes.

The present incidence of taxes on sugar is 8 per cent while the proposed GST rate on sugar is only 5 per cent, i.e., lower by 3 per cent.

Similarly, the present incidence of taxes on milk powder, tea and coffee (other than instant coffee) is 7 per cent while proposed GST rate on these items will be only 5 per cent.

The proposed GST rates would be much lesser than the prevailing tax incidence in the all cases.

Sugar currently attracts specific central excise duty of Rs71 per quintal plus Sugar Cess of Rs124 per quintal, which translates to ad valorem rate of more than 6 per cent. Including incidence on account of account of CST, octoi, and entry tax etc, the present total tax incidence would work out to more than 8 per cent. Against this, the proposed GST rate on sugar is only 5 per cent, ie, 3 per cent less than the present incidence of taxes.

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

Milk powder attracts nil central excise duty and 5 per cent VAT at present. Considering embedded taxes in production of milk powder and the incidence on account of CST, octroi, and entry tax etc, the present total tax incidence works out to more than 7 per cent. Against this, the proposed GST rate on milk powder is only 5 per cent.