That will not happen on July 1.
New Delhi:Prices of majority of essential drugs will increase by up to 2.29 per cent when the Goods and Services Tax regime kicks in from next month. However, some select medicines such as insulin will see a reduction in prices with the government revising GST rate downwards to 5 per cent from 12 per cent proposed earlier.
On the issue of review of GST rate on hybrid cars, Jaitley hinted that the tax rate will not be reviewed, saying the industry demands were not in sync with a study conducted by tax officers.
Besides, it will result in non-creditable tax costs where an oil and gas company will pay the GST on procurement of plant, machinery and services, and will be unable to get credit on sale of the finished products (which are out of the purview of GST) as the input GST would not be credible against the excise duty and value added tax levied on these fuels, the report said.
Finally, the industry also wants branded packaged commodities, which will attract a GST of 5%, to be charged at the zero rate applicable to unbranded loose staples including rice, wheat and other cereals.
Giving reasons for lowering the tax rates, Finance Minister Arun Jaitley had said the objective was to maintain equivalence to the existing taxation level. Two decisions, one from the state and another from the Centre, will deprive civic body of its most bankable source of revenue.As the Centre has fixed 18% as GST for movie tickets priced below Rs 100 and 28% for tickets priced above Rs 100, the corporation might end up losing a major chunk of its revenue. The move “would now help SMEs of power loom, knitting and processing sectors not to face much financial burden”, he said in a statement. Job work under textile sector after producing grey fabric or after producing yarn are taken as services and were subjected to 18 per cent GST. Under such situation, the manufacturer who does not have integrated composite units to complete the process of embroidery, printing and finishing as per the market requirements would have been in a great loss, Thulasidharan added.