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May, 26 2017

Proposed GST rates on Sugar, tea, coffee, milk powder lower than present levies

At present, sugar attracts specific central excise duty of Rs 71 per quintal plus sugar cess of Rs 124 per quintal, which translates to ad valorem rate of more than 6%.

Sugar, tea, coffee and milk powder will cost less from July as the proposed goods and services tax (GST) will be lower than the present levies.

According to an official statement, “Proposed GST rates would be much lesser than the prevailing incidence of taxes in case of sugar, tea and coffee (other than instant coffee) and milk powder."

At present, sugar attracts specific central excise duty of Rs 71 per quintal plus sugar cess of Rs 124 per quintal, which translates to ad valorem rate of more than 6%.

The present total tax incidence including incidence on account of central sales tax, octroi, and entry tax would work out to more than 8% as against the proposed GST of 5%, which is 3% less than now.

The finance ministry said, "In the case of tea and coffee (other than instant coffee), both the commodities attract nil central excise duty and VAT rate of 5%. Considering embedded taxes in production of tea and coffee and the incidence on account of CST, octroi and entry tax the present total tax incidence works out to more than 7%. As against this, the proposed GST rate for tea and coffee (other than instant coffee) is only 5%."

It added, "Milk powder attracts nil central excise duty and 5% VAT now. 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."

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