New Delhi: India on Thursday finalised tax rates that will apply to different goods and services under a new sales tax which New Delhi aims to roll out from July 1.
A panel comprising central and state finance ministers fixed the rates for over 1200 items under the Goods and Services tax, amid demand by some states to keep essential items under the lower tax category.
"Out of 1,211 items, GST rates on all except six categories have been decided," Finance Minister Arun Jaitley told reporters after a meeting in Srinagar, the capital of Jammu and Kashmir.
The panel will discuss tax rates for gold and some other items on Friday and could meet one more time if necessary to decide rates on remaining items.
Under the new tax, rates will range from 5 to 28 percent, with 12 percent and 18 percent being the standard rates. Most raw food items including milk will be exempted from tax while the panel still has to finalise rates for processed food items.
Some food items like coffee and edible oil will be taxed at a rate of 5 percent, Revenue Secretary Hasmukh Adhia said. Coal will be taxed at 5 percent along with a levy of 400 rupees per tonne.
The long-awaited Goods and Services Tax (GST) is hailed as India's biggest tax overhaul since independence in 1947. It will replace a slew of central and state levies, transforming Asia's third largest economy into a single market.
The council also approved most of the draft rules relating to the new tax that would push businesses to upgrade their infrastructure for filing tax returns under the new system.
"Several process related changes can now be undertaken as the passage of the rules has paved the way for the introduction of the most significant tax reform in India," said M.S. Mani, senior director at Deloitte Haskins & Sells LLP.