GST Council fixes 4-rate structure
The GST Council has finalised 4 tier Goods and Services Tax (GST) rate structure with a multiple-slab rates, including the cess for the new indirect tax regime. Thus, GST will be levied at multiple rates ranging from 0% to 28%.
Decision in this regard was taken by the GST Council meeting chaired by Union Finance Minister Arun Jaitley in New Delhi.
What are the outcomes of GST Council meeting?
- The four bands of tax rates have been fixed at 5%, 12%, 18% and 28%. Besides, another category of tax between 40% and 65% will be imposed on luxury goods like pan masala, tobacco products, aerated drinks and high-end cars.
- Nearly half of the consumer inflation basket goods including food grains, will be zero-rated (i.e. 0% GST) to insulate people from inflationary pressures.
- The lowest slab of 5% will be for items of common consumption. The bulk of the goods and services including fast-moving consumer goods will be included in two standard rates of 12% and 18%.
- The highest slab of 28% will include white goods and all those items on which current rate of incidence varies from 30-31%.
- Ultra luxuries, demerit and sin goods, will attract 28% GST along with a GST cess for a period of 5 years. The quantum of cess on each of these will depend on current incidence of tax.
- The revenue raised from the cess will be used to finance the compensations to States for the losses. This cess will have a sunset clause of five years.
- If the revenue raised from the cess is found to be in excess of the sums then GST Council will decide where to use the surpluses.
- The GST will subsume the multitude of cesses currently in place, including the Swachh Bharat Cess, Krishi Kalyan Cess and the Education Cess.
- Only the Clean Environment Cess will be retained and revenues from it will also fund the compensations.
The GST Council was not able to take a call on the GST rate on gold. It will be finalised after the fitting to the approved rates structure of all items is completed.
Categories: India Current Affairs 2017