The Goods and Services Tax (GST) Council meeting being held in Sringar has apparently finalised the tax rates on 18-May the first day of the two-day meeting, under the helm of union finance. In which finance ministers of almost all states were present, “80-90 percent” of goods and services have been fitted under the four tax slabs — 5, 12, 18 and 28 percent.Nearly 81 per cent of the items will fall under below-18 percent GST rate slabs and only 19 percent of the goods will be taxed above 18 percent.A decision was taken to exempt food items such as wheat, rice and milk from the GST while the Mint reported that cars would be taxed at 28 percent, the highest rate. In all, rates for 1,211 items have been finalised. Life-saving drugs will be subject to 5 percent tax.Refgrigators and air-conditioners will attract 28 percent.
The states would receive provisional compensation from Centre for loss of revenue due to abolition of taxes such as VAT (value added tax), octroi and implementation of GST. The compensation would be met through levy of a ‘GST Compensation Cess’ on luxury items and sin goods like tobacco, for the first five years.The cess on luxury goods have been capped at 15 percent. While the effective cess on goods such as “luxury” cars will 12 percent, the Council has decided to fix a cap to give headspace for expansion in the future.
Cereals have been kept under the “exempt” category, signs that food grain prices could come down after GST kicks-in from July 1. Gur (jaggery) has also been kept under the “exempt” category.The full details of the goods and services, and the rates applicable thereof, are likely to be released officially on 19-May-2017.