GST Council on Thursday finalised tax rates on various goods and services under the standard four-slab structure. The Council, headed by Finance Minister Arun Jaitley, has decided to keep essential items of daily use in the lowest bracket of 5%, whereas some of the luxury items have been put in the bracket of 28% as well.
As the 14th GST Council meeting begins in Srinagar today, the speculations related to finalisation of taxes have peaked up. Rightly so, the Council has finalised that all the items that are related to daily needs would be taxed at 5% during GST regime. There are four tax slabs that are proposed under GST era, and those are 5%, 12%, 18%, and 28%. Experts have already opined that most of the fitments would be done in accordance with the variation of demands of specific goods and services as per the socio-economic structures. The officials associated with the ministry have claimed that the fitments have been done in an appropriate way so as to avoid increase in tax incidence.
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Therefore, the rates close to the present incidence of excise duty (inclusive of VAT or service tax) has been considered to be the standard rate. The complete details regarding the decided rates would be available once the meeting gets over tomorrow. The point to be noted here is that various state finance ministers have sought exemption on different items, such as silk yarn, handicraft items, puja material, and so on.
A government official said that Mr. Jaitley opined that there should be minimum exemptions, and he even mentioned that exemptions should be provided only if it is so essential. Before the meeting began, Kerala Finance Minister Thomas Isaac mentioned that gold should be charged at the rate of 5% under the GST regime. Mr. Isaac felt that gold is not at all a necessity, and therefore, it must not be taxed at 1%. The finance minister of Uttar Pradesh sought zero levy on ‘puja samagri’ instead of the proposed 18%. Some other finance ministers of states were keen on only two rates for service tax — 12 % and 18 %. Whatever might be the expectations and specifications of various finance ministers, all of them agreed to extend their wholehearted support so as to implement GST with effect from July 1st.
The Council expects that most of the qualms related to tax rates would be resolved during the ongoing meeting. Once the GST is implemented across India, it would subsume most of the taxes that are currently levied and collected by various States and Centre.