Four main tax slabs from 5% to 28% under GST, says government
Five per cent duty will be levied on items of mass consumption used by commoners, and two standard rates of 12% and 18% will be in force, Union finance minister Arun Jaitley said.
Foodgrains are likely to be exempted from the GST, and tobacco products may be taxed at 40%, he said.
A compensation pool created through cess would be there for five years, Jaitley said.
The long-delayed tax, which would transform Asia’s third largest economy into a single market, could boost revenues through better compliance while making life simpler for business that now pay a host of federal and state levies.
The brackets, discussed at a meeting of the GST Council overseeing plans to introduce the national sales tax next spring, are steeper than the rates of 6, 12, 18 and 26% earlier proposed by the government.
“There was a broad consensus on four rate slabs,” Haseeb Drabu, finance minister for Jammu and Kashmir, told reporters after attending the GST Council’s meeting.
Jaitley will seek parliamentary approval for bills later this month that would set the rate and scope of the GST. State assemblies must also to approve similar bills for the tax to enter force as planned next April 1.