Thursday 3 November 2016

Final GST rates declared by GST Council

A four tier GST tax structure of 5, 12, 18 and 28 per cent, with lower rates for essential items and the highest for luxury and de-merits goods that would also attract an additional cess, was decided by the GST Council today. 

With a view to keeping inflation under check, essential items including food grains, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate. 

Mr. Jaitley said:
“We have been able to finalise the GST rate structure. Zero-tax rate to apply to 50 per cent of items in the Consumer Price Index basket, including grains used by the common man. Five per cent duty will be levied on items of mass consumption used by common people
''Two standard rates of 12 and 18 per cent will be there in GST. Items taxed at 30-31 per cent [excise plus VAT] will be taxed at 28 per cent. Additional revenue from highest tax slab to be used to keep essential use items at 5 per cent and transfering common use items to 18 per cent.
“Luxuary cars, tobacco, aerated drinks to be levied with a cess, which along with clean energy cess, will be used to compensate States for loss of revenue. Compensation pool created through cess will be for five years. Rs. 50,000 crore is required to be paid to States for loss of revenue in the first year of GST rollout."

The structure would be on following Lines: 👉 6% - Precious metals, Gems, Stones, Essential Foods Items etc. 👉 12% - FMCG, Non Essential Food items etc. 👉 18% - The Standard Rate - It will cover majority of goods & services. 👉 26% - Some specific items like Luxury cars will be covered. Also there is talk of imposing Sin Taxes on Tobacco Products @ 40%

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