five goods on which no vat is charged

This article will give you a list of 5 goods on which no VAT is charged.

Goods and Services Tax (GST) is a tax in India that was introduced on the 1st of July, 2017 to provide a nationwide indirect tax regime. The GST replaces most taxes levied by the central and state governments. The goal of GST is to create one unified national market, increase productivity, simplify trade processes and regulations, and generate revenue for the government through taxes on consumption . In order to achieve this goal, the GST replaces all taxes of state and central government, including excise duty, service tax, VAT, etc.

Under the present tax system there are multiple taxes levied at various rates. The federal government levies different types of taxes on goods and services such as:

The 7th Central Pay Commission has recommended removal of the VAT on 5 goods which includes:

India is a signatory to the OECD’s Base Erosion and Profit Shifting (BEPS) Project and has been working towards implementing measures to combat base erosion and profit shifting. One of the initiatives that India is working on is the GST which will be implemented nationwide by 1 November 2017. For the transition to the new tax regime, the government has implemented two transitional measures to protect specific sectors of manufacturing and services. These measures are:
The VAT on five goods and services was removed on 15 July 2017 under transitional arrangements. The changes were introduced by an amendment to Rule 25(2) of The Central Goods and Services Tax (Second Amendment) Rules, 2016 which came into force on 15 July 2017 with effect from 1 November, 2017.

The amendment to Rule 25(2) of the Central Goods and Services Tax (Second Amendment) Rules, 2016 provides for following transitional arrangements to protect specific sectors:

Following examples illustrate the value of these goods.

This allows oil companies which are also dealers in petroleum products to claim input tax credit on such inputs while supplying petrol or kerosene at less than their relevant tax-inclusive selling price. This protects the segment of domestic manufacturing that is predominantly engaged in blending non-taxable fuel with taxable fuels for sale. This is a benefit based on input tax credit claimed by an oil company towards its taxable input used in blending non-taxable fuel with taxable fuels for sale.

The input tax credit is calculated based on a conversion factor of 1.27. Which is the same as the conversion factor in case of GAS. The sale of blended fuel by an oil company to other fuel companies does not attract VAT at all. Furthermore, the credit claimed by an oil company will not be allowed if they have availed GST input tax credit in respect of same input in prior GST regime.

Petroleum products such as petroleum jelly may be used as non-toxic surface-active agents, which are demanded by industries like pharmaceutical and cosmetic industries, as well as by consumers for various purposes, ranging from skin moisturisation to other skin care applications such as shampoos, conditioners and hair treatments. Petroleum jelly is used as a lubricant for ink pens, sewing machines and other electric appliances.

The amendment to Rule 59 of the Central Goods and Services Tax (Fourth Amendment) Rules, 2017 provides for a credit against tax payable on input tax credit claimed by an oil company in respect of any input used in blending taxable fuel with non-taxable fuel for sale. This reduces the cost burden on traders who mix liquid petroleum gas (LPG) with kerosene, diesel or jet fuel to be transported to other stations. The benefit is based on a conversion factor of 1.27 which is the same as the conversion factor under GST regime.

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