GST Tax Rates
The proposed goods and services are likely to be taxed as follows, though a decision on actual classification is to be taken by the GST Council shortly:
Rate | Items Likely to be Covered |
0% | 50% items in the Consumer price index items such as food |
5% | Aam aadmi items i.e. items of mass consumption |
12% | Certain Goods |
18% | Service sand Certain Goods |
28% | Demerit goods"/ "Sin Goods" -Luxury cars, tobacco, cigarettes and aerated drinks |
We believe that since there would be zero tax on essential items such as food etc., GST should not have an inflationary effect.
Luxury cars, tobacco and aerated drinks would also be levied with an additional cess in addition to the highest tax rate of 28%. The Cess would be lapsable after five years. According to Finance Minister, Shri. Arun Jaitley, Cess will not be an additional burden on the taxpayers because the total of 28% and Cess will not exceed the total of the existing levies.
Further according to Mr. Jaitley all GST decisions were taken by consensus except for the 28% slab.
The next step for the GST Council is that of classifying the goods under each rate. We expect a decision on the same in the next few days.
Fixation of GST Rates was a major hurdle,which has been cleared and accordingly we can expect the Parliament to pass the GST legislations in the Winter Session beginning November 16, 2016 and finally introduction of GST by April 01, 2017.