“The GST council today finalized the tax rates on goods and services under the four-tier rate structure. As of now the essential items of daily use are being kept in the lowest bracket of 5%.”
In the meeting today held at Srinagar, the GST Council finalized tax rates on 80-90% of goods and services under the prescribed slab structure with essential items and daily use items being kept in the lowest tax bracket i.e. 5%.
In the opening session of the two-day meeting to be held at Srinagar, The GST Council headed by Union finance minister, Mr. Arun Jaitley, also approved rules for the biggest indirect Tax regime that is scheduled to roll-out from 1 July.
As per the official sources, it is reported that 80-90% of the items have been kept in 5%, 12%, 18% or 28% brackets. The same has been done in such a way that there is no increase in tax incidence to the ultimate consumer. The present incidence of excise duty plus VAT or service tax or the effective tax rates has been considered to be the rate under the GST.
The complete details about the rates and GST Rules decided as of now are likely to be available once the meeting gets concluded by tomorrow.
The GST is termed as the national sales tax that will be levied on consumption of goods or use of services. The indirect tax reform will replace 16 current indirect taxes out of which seven will be central taxes like excise duty and service tax and nine will be state taxes like VAT and entertainment tax. The introduction of the same will be creating India as one market with one tax rate.
With the roll out of GST, India will also join the League of Nations with a goods and service tax. France was the first country to adopt and implement the GST in 1954. Since then, various countries like Germany, Italy, the UK, Japan, Canada and Australia have been among the over a dozen nations which are working on a framework like GST. Even, China implemented GST in 1994 while Russia did it in 1991. As of now, Saudi Arabia plans to do it in 2018.
The Reserve Bank of India called GST as the “game changer”. It said that the implementation of this indirect tax regime is likely to ensure higher tax compliance and an overall improvement in government finances over the medium term.
The GST is a destination-based single tax which will be levied on the supply of goods and services from the manufacturer to the consumer. It is single indirect tax for the entire country.