Sugar, tea, coffee and milk powder will cost less with tax incidence coming down under the Goods and Services Tax scheduled to be rolled out from July 1. Currently, sugar attracts specific central excise duty of Rs 71 per quintal plus a cess of Rs 124, which translates into ad valorem rate of more than 6 per cent.
If central sales tax (CST), octroi, and entry tax are factored in, the total incidence works out to more than 8 per cent. “As against this, the proposed GST rate on sugar is only 5 per cent, i.e. 3 per cent less than the present incidence of taxes,” the finance ministry said.
The tax under GST on tea and coffee—other than instant coffee—will come down to 5 per cent, from the current 7 per cent. Milk powder attracts nil central excise duty and 5 per cent VAT.
The embedded taxes in production of milk powder and the incidence on account of CST, octroi, and entry tax work out to more than 7 per cent. As against this, the proposed GST on milk powder is only 5 per cent.
Termed as the most ambitious tax reform in the country, GST will subsume most of the indirect taxes.