GST Tax Rate for Loans

GST Tax Rate for Loans and Other Services

GST

GST discussions have been going on in India much before it was implemented (July 1, 2017). Since it came into effect, more than 23 GST council meetings have taken place. There are total 5 slabs – 0%, 5%, 12%, 18% and 28%. Almost 177 items have been shifted from 28% to 18% in the last GST council meeting. There is an expectation that more changes may occur due to its demand.

However, talking about loans, there has been no major change in the overall cost involved. In this article, we have talked about the impact of GST on loans to know whether it has brought a good news, a not-so-good one or it does not matter. Later we have given the list of products and services covered under each GST tax rate slab.

What is the difference between processing fee on Loans before and after GST?

The tax applicable on loans comes under GST tax list of 18 per cent. If the disbursal amount for your personal loan is ₹2,00,000 the difference between the processing fee is as follows:

Before GST- Processing fee (1% of the loan amount) + Service Tax (15% of the processing fee) = ₹2,000 + 300 = ₹2,300

After GST- Processing fee (1% of the loan amount) + GST (18% of the processing fee) = ₹2,000 + 360 = ₹2,360

If the disbursal amount for your home loan is ₹20,00,000 the difference between the processing fee is as follows:

Before GST- Processing fee (1% of the loan amount) + Service Tax (15% of the processing fee) = ₹20,000 + 3000 = ₹20,300

After GST- Processing fee (1% of the loan amount) + GST (18% of the processing fee) = ₹20,000 + 3600 = ₹20,360

As visible, there is not much change in the processing fee of the loan and hence you do not have to worry about paying extra.

GST Tax Rate Slab List for Different Products

Below is the list of all the products with corresponding rate slab:

0% Tax Slab

  • Jute
  • Fresh meat
  • Fish chicken
  • Eggs
  • Milk and Butter milk
  • Curd
  • Natural honey
  • Fresh fruits and vegetables
  • Flour, besan, bread
  • Prasad
  • Salt
  • Bindi
  • Sindoor
  • Stamps
  • Judicial papers
  • Printed books
  • Newspapers
  • Bangles
  • Handloom,
  • Bones and horn cores, bone grist, bone meal, etc.;
  • Hoof meal, horn meal, Cereal grains hulled,
  • Palmyra jaggery,
  • Salt – all types,
  • Kajal
  • Children’s’ picture
  • Drawing or colouring books
  • Human hair
  • All goods other than live horses

5% Tax Slab

  • Skimmed milk powder
  • milk food for babies
  • Cream & yogurt
  • Branded Natural honey
  • Preserved frozen vegetables
  • Coffee and Tea
  • Branded Cereal groats, meal and pellets
  • Insulin
  • Soya beans, ground nuts
  • Natural gums, resins, gum resins
  • Beet sugar, cane sugar
  • Cocoa beans whole or broken, raw or roasted
  • Pizza bread, Seviyan (vermicelli)
  • Diagnostic kits for detection of all types of hepatitis
  • Agarbatti
  • Herb, bark, dry plant, dry root, commonly known as jari booti and dry flower

12% Tax Slab

  • Butter and other fats
  • Cheese
  • Dry fruits
  • Starches
  • Refined sugar
  • Wadding, gauze, bandages and similar articles
  • Tooth powder
  • Feeding bottles

18% Tax Slab  

  • Condensed Milk
  • Malt
  • Corn flakes, Pasta, spaghetti, macaroni
  • Nicotine polacrilex gum
  • Hair oil, toothpaste and soaps
  • Self-adhesive plates, sheets, film, foil, etc. of plastics
  • Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products

28% Tax Slab

  • Molasses Chewing gum / bubble gum and white chocolate
  • Cocoa butter, fat and oil
  • Waffles and wafers coated with chocolate
  • Perfumes and toilet waters
  • Floor coverings of plastics, Baths, shower baths, sinks, wash basins
  • Fork-lift trucks; other works trucks fitted with lifting or handling equipment
  • Fire extinguishers
  • Self-propelled bulldozers, angledozers, graders, levellers, scrapers, mechanical shovels, excavators, shovel loaders, tamping machines and road rollers
  • Other moving, grading, levelling, scraping, excavating, tamping, compacting, extracting or boring machinery, for earth, minerals or ores; piledrivers and pile extractors; snowploughs and snowblowers

GST Tax Rate for Different Services

Below is the list of all the services that are covered under the corresponding GST tax slabs.

0% Tax Slab

  • Hotels and lodges with tariff below ₹1000, special case service has been exempted under GST. Rough precious and semi-precious stones will attract GST rate of 0.25%.

5% Tax Slab                                                                          

  • Transport services like railways and airways
  • Transport of passengers by air in economy class
  • Supply of tour operators’ services
  • Selling of space for advertisement in print media
  • Small restaurants with turnover of ₹50 Lakhs
  • Transport of passengers by motor cabs and radio taxis

12% Tax Slab

  • Business class air tickets
  • Hotels, inns, guest houses with a room tariff between ₹1000 and ₹2500 per room per night

18% Tax Slab      

  • AC hotels which serve liquor to customers
  • Hotels, inns, guest houses, which have a room tariff of ₹2500 and above but less than ₹5000 per room per night
  • IT services
  • Telecom services

28% Tax Slab

  • Race club betting & gambling
  • Five-star Hotels
  • Entertainment & Cinema
  • Hotels, inns, guest houses, which have a room tariff of ₹5000 and above per room per night

Srishti Singh is a professional financial writer who has written on various financial products like personal loans, home loans, credit cards & mutual fund investment, etc. She believes in delivering best of her knowledge so as to help the readers understand the product and be aware of their financial decisions.

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