GST Council finalises tax rates on 80-90% goods, services
On May 18, 2017, the Goods and Services Tax (GST) Council headed by Union Finance Minister Arun Jaitley and comprising representatives of all states has finalised tax rates on 80-90% of goods and services under four brackets (5%, 12%, 18% and 28%). Essential items of daily use have been kept in the lowest bracket of 5%.
- The GST Council also approved 7 set of rules for the Goods and Services Tax (GST) regime that will be rolled out from July 1, 2017.
GST Rollout in India:
- GST will replace 16 current levies (7 central taxes and 9 state taxes), consequentially creating India as one market with one tax rate.
- Arun Jaitley has specifically mentioned that there will be no inflationary impact post the roll out of GST.
- GST rates for 1205 out of 1211 items have been finalised so far.
- GST rates on six categories of products—gold, bio-diesel, beedi and cigarettes, footwear, textiles and agricultural implements—will be finalised in council’s next meeting scheduled to be held on June 3, 2017 in Delhi.
Items – Tax Brackets:
|Percentage of items||Tax Bracket|
|14% out of total items||5%|
|17% of total items||12%|
|43% of total items||18%|
|19% of total items||28%|
|7% of total items||Exempted|
About Goods and Services Tax (GST):
The GST is a destination-based, single indirect tax that will be levied on consumption of goods or use of services across India. It is considered as biggest tax reform since independence in 1947.
- GST is already prevalent in Germany, France, Italy, United Kingdom, South Korea, Japan, Canada and Australia.
- GST was first implemented in France (in year 1954).
- Russia implemented GST in 1991 while China did it in 1994.
- Saudi Arabia is planning to implement GST in 2018.