GST Council Finalises Rates For Most Items
GST Council Finalises Rates For Most Items
Srinagar: The GST Council today finalised tax rates on 80-90
percent of goods and services under the four-slab structure with essential
items of daily use being kept in the lowest bracket of 5 percent.
The Council, headed by Union Finance Minister Arun
Jaitley and comprising representatives of all states, in the opening session of
the two-day meeting also approved rules for the Goods and Services Tax (GST)
regime that is scheduled to kick infrom 1 July.
Official sources said that 80-90 percent of the items
have been fitted in 5, 12, 18 or 28 percent brackets. The fitments, they said,
have been done in a way that there is no
increase in tax incidence.
So rates close to the present incidence of excise duty
plus VAT or service tax has been considered to be the rate under the GST.
The complete details of the rates decided are likely to
be available once the meeting gets over tomorrow. Various state finance
ministers separately sought exemption on items like silk yarn, puja material
and handicraft items.
Jaitley was of the view that there should be minimum
exemptions under the GST and should be provided for only if it is essential, a
government official said.
Before the start of the meeting, Kerala Finance Minister
Thomas Isaac made a case for 5 percent tax on gold under the GST regime instead
of 1 percent being demanded by some quarters as he felt that the precious metal
is not an essential commodity.
Yogi Adityanath-led Uttar Pradesh sought zero levy on
'puja samagri' instead of the proposed 18 percent. A few others are keen on
only two rates for service tax -- 12 percent and 18 percent.
The GST will be a national sales tax that will be levied
on consumption of goods or use of services.
It will replace 16 current levies -- seven central taxes
like excise duty and service tax and nine state taxes like VAT and
entertainment tax -- thereby creating India as one market with one tax rate.
With the GST, India will join select league of nations
with a goods and service tax.
France was the first country to implement the GST in
1954.
Since then, Germany, Italy, the UK, South Korea, Japan,
Canada and Australia have been among the over a dozen nations which have
implemented the GST.
China implemented GST in 1994 while Russia did it in
1991.
Saudi Arabia plans to do it in 2018. Last week, the Reserve
Bank called the GST a "game changer" and said given the cross-country
experience and empirical evidence on efficiency gains from the Value Added Tax
(VAT) in the Indian context, the implementation of this comprehensive indirect
tax is likely to ensure higher tax buoyancy and an improvement in government
finances over the medium term.
The GST is a destination-based single tax on the supply
of goods and services from the manufacturer to the consumer and is one indirect
tax for the entire country.
Finance Minister Arun Jaitley announced that the Goods
and Service Tax (GST) Council has decided rates for around 1,150 items out of
the total 1,211. The rates for remaining goods will be discussed and finalised
on Friday, he said.
Here’s a breakup of the goods falling under the various
tax slabs-
43 percent items are under the 18 percent tax rate.
19 percent are under the 28 percent tax rate.
17 percent are under the 12 percent tax rate.
14 percent items fall under the 5 percent tax rate.
7 percent items fall in the exemption list.
Sugar, tea, coffee, sweets and edible oil will fall under
the 5 percent tax bracket, said Hasmukh Adhia, financial services secretary,
Ministry of Finance. Coal will also be taxed at 5 percent as opposed to the
current incidence of around 10 percent.
Goods such as hair oil, toothpaste and soaps will fall in
the 18 percent category. All capital goods and industrial intermediates will
also fall under the 18 percent bracket. This will help bring down inflation, Jaitley
said.
Cereals, milk and jaggery will be exempted from any tax.
The rates for gold, beedi, cigarette, agricultural implements, footwear,
textiles and biodiesel have not been decided yet, Jaitley said.
The council approved seven rules in today’s meeting in
Srinagar. The legal committee is working on the remaining two relating to
transition provision and return, Jaitley said.
The council had finalised a four-tier rate structure of
5, 12, 18 and 28 percent, with an additional levy or cess on demerit goods,
which will fall under the highest tax slab.
The council on April 7 passed the five GST bills –
Central GST, State GST, Integrated GST, Compensation Bill and the Union
Territories GST.
The blanket tax system is expected to be rolled out form
July 1. However, some company leaders believe that a July implementation seems
unrealistic with most of the small and medium businesses still not registered
on the GST Network.
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