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  India   All India  30 Mar 2017  Decision on tax rates for 5,000 items in April

Decision on tax rates for 5,000 items in April

THE ASIAN AGE.
Published : Mar 30, 2017, 6:40 am IST
Updated : Mar 30, 2017, 8:30 am IST

The GST Council will meet in April to decide the tax rate for some 4,000-5,000 commodities and services under the GST.

Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi (Photo: PTI)
 Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi (Photo: PTI)

New Delhi: After Lok Sabha’s nod to the supporting legislations of the goods and services taxes, the next challenge for the government will be to decide at what rate commodities and services will be taxed under the new indirect tax.

The GST Council will meet in April to decide the tax rate for some 4,000-5,000 commodities and services under the GST. Services will not be taxed more than 18 per cent.

There will be huge pressure to exempt services and commodities used by the common man. The government has said that the GST will be non-inflatory.

The GST Council has already decided a four-tier rate structure — 5 per cent, 12 per cent, 18 per cent, and 28 per cent. There will be zero tax on 50 per cent of the items which currently constitute consumer price index (index used to calculate retail inflation) basket, mostly food products so that there is no inflationary impact. There will also be zero tax on foodgrains.

The five per cent tax rate is expected to be imposed on most of the items of mass consumption. The 12 per cent and 18 per cent will be the standard rates under which most products and services will be taxed.

White goods which currently have overall tax incidence of 30-31 per cent  (including excise and value-added tax) will be taxed at 28 per cent under GST. However, many products in this category such as soap, toothpaste, oil, shaving sticks and even refrigerator, among others, used by lower middle class are likley to be moved to the lower 18 per cent tax slab.

Luxury cars, tobacco, aerated drinks and pan masala will see imposition of cess over and above the highest tax rate of 28 percent. The cess will be for five years and the revenue generated will be used to compensate the states.

As per the decision taken by the GST Council, the maximum cess on luxury cars and aerated drinks will be 15 per cent and on pan masala it will be 135 per cent.

Tobacco cess will be capped at a mixture of Rs 4,170 per 1,000 sticks or 290 per cent, or a combination of both. Cess on coal would be `400 per tonne.

Goods and Services Tax (GST) one of the biggest reform in the indirect taxation in the country since independence seeks to ultimately make India a single market.

It  will replace more than a dozen levies that were fracturing the world’s fastest-growing major economy, unifying India for the first time into a common market with more than 1 billion consumers.

“It’s a massive tax change, administrative change at the centre and the states, lots of procedures, processes, new forms, so there’s a huge implementation challenge,” Chief economic adviser Arvind Subramanian told a news channel on Wednesday.

Tags: lok sabha, gst council, arvind subramanian
Location: India, Delhi, New Delhi