GST rates decided on 1211 items

Nettie James
May 19, 2017

One nation one tax.

The GST Council had earlier agreed on a four-tier tax structure - 5, 12, 18 and 28 per cent - along with a cess on luxury and sin goods such as tobacco, pan masala and aerated drinks.

The Council, on the first day of its two-day meeting being held in Srinagar, decided that almost one-fifth of all goods sold in India will be taxed below 18%, making most of the existing goods cheaper under GST, barring only a few which will cost more.

Even the World Bank has said a smooth implementation of the GST could prove to be a significant push to economic activity as growth could pick up to 7.2 per cent in 2017-18 and further to 7.5 per cent in 2018-19. And today to my mind this is the most important meeting because there is lot of public interest in it, like what taxes you have on salt, on cigarettes, on ships, so it affects the general public.

Jaitley complimented Drabu and the state government for making outstanding arrangements for the final leg of the GST Council before the law is rolled out on July 1 this year.

"The excise duty and service taxes implemented by the Centre and the Value Added Taxes and other taxes implemented by the states will be integrated", he said.

Air-conditioners and refrigerators will come under the 28 per cent tax slab, while life saving drugs have been kept at 5 per cent rate. Reacting to the development, Suresh Nair, Tax Partner, EY India said that the committee has done a very good job to keep tax rates on 81 percent items.

Out of the 1,211 items, the GST rate for all but six was decided on the first day, he said. These include a rate of zero for essential items such as grains, 5 percent for mass consumption items like tea, commonly used products such as processed foods at 12 percent. "Another aspect encountered and accepted by most of the GST countries lies in the statistic that GST will be inflationary, especially if the effective tax rate is higher than what prevailed before". The Council did not take any decision on services tax rates. There is no increase.

Currently, there are 17 items in the negative list of services on which service tax is not levied. In the overall basket there would be a reduction, but we are banking on the hope that because of a more efficient system, evasion would be checked and tax buoyancy would go up. "We should have given more time to go through the GST and VAT Bills", Mishra said.

Other reports by Insurance News

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