Understanding the 0.1% Rate in GST
The Goods and Services Tax (GST) is a comprehensive indirect tax levy on the manufacture, sale, and consumption of goods and services in India. Introduced in 2017, GST has replaced multiple indirect taxes, including Value Added Tax (VAT), Central Excise Duty, and Service Tax. One of the unique features of GST is the multiple tax rates, including a 0.1% rate, which is applicable to specific goods and services.
What is the 0.1% GST Rate?
The 0.1% GST rate is the lowest tax rate under the GST regime. This rate is applicable to a selected list of goods and services, which are considered essential or merit-based. The 0.1% GST rate is designed to keep the prices of these essential items low and affordable for the masses.
Goods Covered under 0.1% GST Rate
The following goods are covered under the 0.1% GST rate:
- Agricultural products: Fresh fruits, vegetables, cereals, pulses, and other agricultural products are exempt from GST or attract a 0.1% GST rate.
- Milk and dairy products: Milk, butter, cheese, and other dairy products attract a 0.1% GST rate.
- Bread and baker's products: Bread, cakes, pastries, and other baker's products are covered under the 0.1% GST rate.
- ** Puja items**: Certain puja items, such as bindi, kumkum, and sacred thread, attract a 0.1% GST rate.
Services Covered under 0.1% GST Rate
The following services are covered under the 0.1% GST rate:
- Hotel accommodation: Hotel rooms with a tariff below ₹1,000 per day attract a 0.1% GST rate.
- Railway and air travel: Railway and air travel, including economy class tickets, attract a 0.1% GST rate.
- Financial services: Certain financial services, such as life insurance, health insurance, and mutual fund products, attract a 0.1% GST rate.
Benefits of 0.1% GST Rate
The 0.1% GST rate has several benefits, including:
- Affordability: The low GST rate makes essential goods and services more affordable for the masses.
- Increased demand: The lower GST rate can lead to increased demand for these goods and services, which can boost economic growth.
- Reduced burden on taxpayers: The 0.1% GST rate reduces the tax burden on taxpayers, especially those in the lower income groups.
Conclusion
The 0.1% GST rate is a vital component of the GST regime, ensuring that essential goods and services remain affordable for all. By understanding the goods and services covered under this rate, taxpayers can make informed decisions about their purchases and benefit from the lower tax burden.
