GST council has agreed on rate structure as
0%, 5%, 12%, 18% and 28%. Having a slab rate structure in GST is a departure
from popular international practice of having one rate of tax for all goods and
services.
The council has not announced schedule of goods
and services under each slab rate. The Finance Minister has mentioned that highest tax slab
rate applicable to items currently taxed at 30% to 31% (excise duty plus VAT)
will be taxed at a demerit rate of 28%.
Some of the goods taxed at 28% will be
charged with an additional cess for five years.
Finance minister Arun Jaitley said the GST
Council had agreed to zero-rating for nearly half the items in the consumer
price index basket as well as major foodgrains, while goods of everyday use
would attract 5% GST, as against 6% proposed earlier. In addition, there wi ll
be two standard rates of 12% and 18%, a move meant to blunt the Congress's
demand for a standard 18% levy . White goods and similar products will face 28%
tax, instead of 26% suggested by the Centre earlier.
To help the Centre compensate the states for
any possible revenue loss, the GST Council agreed to levy cess on luxury goods
such as cars, tobacco products, paan masala and aerated drinks in addition to
continuing with the clean energy cess on coal for five years. This will help
the Centre net around Rs 50,000 crore to gather funds to compensate states for
any revenue loss due to GST.
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