The GST Council has fixed the tax rate, moving a step ahead in materialising the dream to make India a single market from 1 April 2017.
Finance minister Arun Jaitley said at a press conference that GST Council has fixed the four-tier structure of 5 percent, 12 percent, 18 percent and 28 percent.
The Centre had earlier proposed the tiers at 6, 12, 18 and 26 percent, the peak rate being for FMCG and consumer durables.
The Council comprising state finance ministers and headed by Union Finance Minister Arun Jaitley has opted for a lower rate of 5 percent instead of the
proposed 6 percent.
The members have agreed to raise the higher slab to 28 percent rate from the proposed 26 percent.
The middle slabs of 12 percent and 18 percent for certain categories have been retained.
The finance minister said 50 percent of the goods comprising the CPI basket will attract no tax. The five percent tax rate is applicable on items for mass consumption.
There are two standard rates of 12 percent and 18 percent.
Most of the white goods will be taxed at 28 percent with riders under GST, as against the present 30-31 percent.
The finance minister also said that several items will be transferred to 18 percent bracket from 28 percent now.
The cess on sin and energy cess will be added to state compensation pool. The Centre has agreed to to pay Rs 50,000 crore as compensation in the first year of GST to make good the revenue loss incurred by states.
GST Council has approved cess on tobacco products, and sin items. Aerated drinks, pan masala, luxury cars and tobacco will be taxed higher than 28 percent. The decision on rate for gold is yet to be taken.
Tax rate was considered one of the most contentious issue. With a resolution arrived at for this, Parliament can now go ahead with the legislations of the Central GST (CGST) and Integrated GST (IGST) in the Winter Session beginning November 16 and pave the way for rollout of the new indirect tax regime from April 1 next year.
Commenting on the development, Abhishek Jain, partner, Ernst and Young, said with the GST Council arriving at a decision on tax rates and slabs one of the fundamental issues regarding the tax reform has been resolved.
"Now the committee of secretaries need to decide on what products will fall under each tax bracket. The industry will be keenly awaiting these decisions since that is likely to have impact on their businesses," he said.
However, the council may be able to take a decision on taking up required legislations in the coming Winter Session now, he said.
Published Date: Nov 03, 2016 05:10 pm | Updated Date: Nov 03, 2016 06:49 pm