New Delhi, May 19 (Agencies) : Putting at rest the speculation about the inflationary impact of nationwide indirect tax on household budgets, the GST Council has decided to exempt essential commodities like foodgrains from the tax.

Products like hair oil, soaps and toothpaste will become cheaper as these products would be taxed at 18 per cent instead of the current overall tax incide-nce of 22-24 per cent. Daily-use items like sugar, tea, coffee and edible oil will attract the lowest tax rate of five per cent, almost the same as current incidence.

Cars, however, would get costly. Small cars will be charged one per cent cess on top of 28 per cent tax, mid-sized cars will attract three per cent cess and luxury cars will attract 15 per cent cess on top of the peak rate of 28 per cent.

The GST Council, the apex body for Goods and Service Tax (GST) comprising Union and state finance ministers, has finalised tax rates for 1,205 items on Thursday. The rates for the remaining six items, which include gold, footwear, branded items, packaged food items, and beedi, and services would be fixed on Friday. As many as 81 per cent of the items will attract 18 per cent or less GST.

Seven per cent of the items fall under the exempt list while 14 per cent have been put in the lowest tax bracket of 5 per cent. Another 17 per cent items are in 12 per cent tax bracket, 43 per cent in 18 per cent tax slab and only 19 per cent of goods fall in the top tax bracket of 28 per cent.

ACs and refrigerators will fall in the 28 per cent tax slab while life saving drugs have been kept at five per cent rate.

“There will be no inflationary impact as most of the rates which are at 31 per cent have been brought down to 28 per cent,” finance minister Arun Jaitley said.

“Cereals will be in exempt list. But what is to be done with packaged and branded food that has to be separately decided? We are yet to take a decision on that,” he said.

“Tax rate under GST will not go up for any of the commodities. There is no increase. On many commodities, there is a reduction particularly because the cascading effect of tax is gone,” the finance minister said.