Sugar, tea, milk powder to cost less under GST

New Delhi : The staple morning cup of tea or coffee will cost less as the proposed tax rates under the GST regime will be lesser than the prevailing taxes in case of sugar, tea, coffee (other than instant coffee) and milk powder. The present levy of taxes on sugar is 8%, while the GST rate on sugar is only 5%, which will be 3% less. Similarly, present incidence of taxes on milk powder, tea and coffee (other than instant coffee) is 7%, while the GST rate on these items is only 5%.On the details of the tax incidence item wise, 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%.After including central sales tax, octroi and entry tax, the present total tax incidence would work out to more than 8%. As against this, the proposed GST rate on sugar is only 5%, which is 3% less than present incidence of taxes. Tea and coffee 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 per cent, the government said. Taking into account the taxes in production of milk powder and incidence on account of CST, octroi, and entry tax, the present total tax incidence on milk powder works out to more than 7%. As against this, the proposed GST rate on milk powder is only 5%.