STATE TIMES NEWS
Srinagar: The GST Council on Thursday finalised tax rates on 80-90 per cent of goods and services under the four-slab structure with essential items of daily use being kept in the lowest bracket of 5 per cent.
The Council, headed by Union Finance Minister Arun Jaitley and comprising representatives of all states, in the opening session of the two-day meeting also approved rules for the Goods and Services Tax (GST) regime that is scheduled to kick in from July 1.
Official sources said that 80-90 per cent of the items have been fitted in 5, 12, 18 or 28 per cent brackets.
The fitments, they said, have been done in a way that there is no increase in tax incidence.
So rates close to the present incidence of excise duty plus VAT or service tax has been considered to be the rate under the GST.
The complete details of the rates decided are likely to be available once the meeting gets over tomorrow.
Various state finance ministers separately sought exemption on items like silk yarn, puja material and handicraft items.
Jaitley was of the view that there should be minimum exemptions under the GST and should be provided for only if it is essential, a government official said.
Before the start of the meeting, Kerala Finance Minister Thomas Isaac made a case for 5 per cent tax on gold under the GST regime instead of 1 per cent being demanded by some quarters as he felt that the precious metal is not an essential commodity.
Yogi Adityanath-led Uttar Pradesh sought zero levy on ‘puja samagri’ instead of the proposed 18 per cent.
A few others are keen on only two rates for service tax — 12 per cent and 18 per cent. The GST will be a national sales tax that will be levied on consumption of goods or use of services.
It will replace 16 current levies — seven central taxes like excise duty and service tax and nine state taxes like VAT and entertainment tax — thereby creating India as one market with one tax rate.
With the GST, India will join select league of nations with a goods and service tax.
France was the first country to implement the GST in 1954.
Since then, Germany, Italy, the UK, South Korea, Japan, Canada and Australia have been among the over a dozen nations which have implemented the GST. China implemented GST in 1994 while Russia did it in 1991. Saudi Arabia plans to do it in 2018.
Last week, the Reserve Bank called the GST a “game changer” and said given the cross-country experience and empirical evidence on efficiency gains from the Value Added Tax (VAT) in the Indian context, the implementation of this comprehensive indirect tax is likely to ensure higher tax buoyancy and an improvement in government finances over the medium term.
The GST is a destination-based single tax on the supply of goods and services from the manufacturer to the consumer and is one indirect tax for the entire country.
Earlier, the Finance Minister Arun Jaitley assured the Jammu and Kashmir government of all possible help in restructuring the GST rollout for the state while respecting its special status under Article 370 of the Constitution.
Jaitley promised that the Centre will do all it can in restructuring the GST implementation for Jammu and Kashmir keeping in mind the special status of the state, an official spokesman said here.
He complimented the state Finance Minister Haseeb Drabu for helping organise the final leg of the GST Council meet before the law kicks in from July 1 this year.
Drabu said the historic meeting will make Jammu and Kashmir part of the economic history aimed at reordering the country’s federal polity.
“We are now part of the national policy making which will be recorded in history,” he added.
The meeting will last for two days during which the participants will decide on tax bands for various commodities under the country’s first major indirect tax reform.
QUICK TAKE ON GST
Foodgrains, cereals, milk, jaggery have been completely exempt from GST.
Sweets (like Gulab Jamun. Rasgulla etc.), edible oil, sugar, tea, coffee and coal will attract 5 per cent GST.
Hair oil, toothpaste and soaps are in the 18 per cent bracket along with capital goods and industrial intermediaries.
Nearly 81 per cent of the items will fall under the sub-18 per cent GST rate slabs, Revenue Secretary Hasmukh Adhia said.
Only 19 per cent of the goods will be taxed above 18 per cent.
Small cars will face 28 per cent GST, along with a small cess, while luxury cars will attract 15 per cent cess in addition to GST.
Consumer durables such as air-conditioner and fridge too are in the 28 per cent GST bracket, although officers said given the current incidence of 30-31 per cent, there should be a reduction in prices.
8. Of the 1211 items, 7 per cent will be exempted, 14 per cent will be in the 5 per cent slab, 17 per cent in the 12 per cent bracket, 43 per cent in the 18 per cent segment, while 19 per cent will go into the top bracket of 28 per cent, the Revenue Secretary said.
9. Under the current system, a product is taxed multiple times with different state levies and taxes.
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© 2016 State Times Daily Newspaper