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 gst-rates-2insulate 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.

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Categories: India Current Affairs 2017

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