Jaitley says 5 rate structures presented to GST Council, highest being 26%

This is definitely good news.

What makes this all the more unfortunate is that once the thorny issue of how the compensation was to be calculated was resolved on Tuesday, the states would have agreed to a lower set of rates. Furthermore, states also levy their own taxes that vary from one state to another.

Putrajaya introduced the GST in April 2015 and has earned the government RM29.3 billion to date.

On Tuesday the Centre had proposed four slabs of 6%, 12%, 18% and 26%.

Ever since the first proposal of the GST Bill in India, also known as Constitution Bill 2014 in 2005, there has been a lot of delay and amendments. The discussion on the two items is continuing, it is still inconclusive.

The 6 per cent GST rate on 29 items in CPI basket are now taxed at 3-9 per cent. However, ultra-luxury items such as high-end cars and demerit goods like tobacco, cigarettes, aerated drinks, luxury auto and polluting items would attract an additional cess on top of the 26 percent GST rate.

Items now levied 27 per cent will be taxed at just 18 under the GST regime.

Later, Adhia said the intent was to work out slabs in a way that the overall burden on the consumer came down.

The third day meet which was supposed to happen on October 20 will not take place and now the meeting will happen next month on November 9 and Nov 10.

Estimate of inflation impact on health services is 0.56 percent, fuel and lighting 0.05 percent and clothing 0.23 percent, transport (-) 0.65 percent, education (-) 0.08 percent and housing (-) 0.09 percent, according to the IE report. Last year, the states collected Rs. 4.4 lakh crore, of which CST and octroi added up to around Rs. 1 lakh crore.

"The council discussed as to what would be the basis for calculating revenue in the first five years, that is, the compensation period. Moreover, such dealers will be disabled to upload their tax returns and apply for statutory forms under the existing acts", the department said. A cess on tobacco will fetch the government around Rs 16,000 crore, leaving a gap of Rs 8,000 crore.

The Congress wants the tax rate at 18%.

Once the rate structure is finalised, the technical group of state and Central tax officers will discuss which item would fall in which tax bracket.

The cess is already attracting opposition. In case of excise and sales tax, that are indirect taxes, the economically weaker sections pay as much as the rich and well-off.

As per the proposal, higher rate for services under the indirect tax regime is proposed to be 18 pc, while essential services such as transportation are proposed to be taxed at six or 12 pc.

If the peak GST rate is fixed at 26% as was some suggested, the sector is likely to see a major shakeup.

Also, 70 per cent of the items is proposed to be governed by 18 per cent of lower GST rate.

He said the decisions in the GST Council meetings have been taken by making consensus on each issue.

Nonetheless, UP is projected to gain handsomely under GST as UP is primarily a consumer state and most goods are imported from other manufacturing states.

  • Rosalie Stanley