Centre moots 4 GST slabs

Centre moots 4 GST slabs

The GST is proposed to be levied at 6% , 12%, 18% or 26%; proposal singles out gold, proposes a rate of 4%
The Centre has proposed a four-slab rate structure for the Goods Services Tax, ranging from zero to 26 per cent, at a meeting of the GST Council on Tuesday, Revenue Secretary Hasmukh Adhia said. The structure proposes the GST at 0 per cent on a host of goods and services, including food, health and education services, and at 26 per cent on luxury items, such as fast-moving consumer goods and consumer durables. On consumption of ultra-luxury items and demerit goods, such as big cars and tobacco products, it proposes imposition of cess over and above a 26 per cent GST rate. The GST is proposed to be levied at 6 per cent, 12 per cent or 18 per cent on the remaining goods and services. This proposal singles out gold, for which it proposes a GST rate of 4 per cent, Mr. Adhia said. “The principle for determining the rate on each item being proposed is to levy and collect the GST at the rate slab closest to the current tax incidence on it,” he said. The rate proposed on all items is by and large lower than the current rate. In the 26 per cent slab, for instance, currently most goods are being taxed at about 27 to 31 per cent, he pointed out. The proposal retains only the Clean Environment Cess from the multitude currently in place, with the GST subsuming all the others, including the Swachh Bharat Cess, the Krishi Kalayan Cess and the Education Cess. Mr. Adhia explained that the proposal envisages 10 per cent of the current tax revenue collections base to fall in the 6 per cent GST slab and about 70 per cent in the 12 per cent and 18 per cent slabs. About 25 per cent of the current tax revenue base falls in the proposed 26 per cent slab, including items that will attract cess. The GST Council is likely to finalise the GST rate structure on Wednesday, Union Finance Minister Arun Jaitley told a media conference at the conclusion of the Council’s deliberations on the first day. “At least five alternatives for possible rate structures for the GST were presented to the Council today…discussions will continue tomorrow,” he said. Consensus on modalities Mr. Jaitley said the Council will finalise the GST rates structure keeping in the mind the need to prevent inflation in consumer prices and protecting the revenues of both the Centre and the States. Mr. Jaitley said the Council, that met for nearly seven hours on Tuesday, reached consensus on the modalities for determining the payments that will become due for compensating those States that would lose revenues on account of the shift to the GST. Base year The base year for calculating the revenue of a State would be 2015-16 and…

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