The Goods and Services Tax (GST) Council has finally gave green signal to a four-tier rate structure of 5%, 12%, 18% and 28%. Finance Minister Arun Jaitley informed the two items that were discussed by the GST Council were rate structure and compensation formula, and cross empowerment.
NEW DELHI: “Broadly under the new rate structure, the aam aadmi items will be taxed at a rate of 5%,” Jaitley said. “50% of the items that come under the consumer price index basket will have zero tax on them. 5% duty will be for items of mass consumption. Standard rates of 12% and 18% will be applicable on other items,” Jaitley said, adding that the GST cess will not put additional burden on consumers.
Arun Jaitley chaired the GST Council which started its two-day crucial meeting today to decide on tax rate including the levy of cess and sort out the vexed issue of jurisdiction over assessees.
Besides, a top rate of 40% for demerit goods like tobacco, aerated drinks and special utility vehicles has been proposed. This is a departure from Centre’s proposal of a 6% floor rate and 26% peak rate.
Foodgrains are likely to be exempted from the GST, and tobacco products may be taxed at 40%, FM Jaitley said.
Finance Minister said that the Government has kept about 50% of products in the consumer basket, such as food grains, as “zero-rated”.
At the last meeting, the Council agreed on keeping base year for calculating the revenue of a state at 2015-16, and considering a secular growth rate of 14% for calculating the likely revenue of each state in the first five years of implementation of GST.