After so much hustle bustle, the GST Council declares 4-tier GST Rates ranging from 5% to 28%.
The GST council that consists of the Finance Minister, Mr Arun Jaitley and his respective counterparts from different states started with their 2-day deliberations today. By the end of the first day itself, they have approved and announced the final four bracket GST tax rate structure.
Post few modifications in the proposed GST rates structure of 6%, 12%, 18% and 26%; the final four-bracket structure has been declared at 5%, 12%, 18% & 28% which will attract lower tax rates for necessities and higher rates for luxury and demerit goods.
The new GST rates structure would be applicable from April 01, 2017 wherein with a view to keep a check on inflation, necessities including food would be taxed at zero-rate.
If on one hand food grains will fall in the zero-rated category then on the other hand aerated drinks, tobacco products, pan masala, luxury cars will be taxed at the rate of 28% with an additional cess as well. The 5% rate i.e. the lowest one would be applicable on the common use items.
The provision of applying an additional cess on the products falling under 28% bracket and the clean energy cess have been created to compensate for the loss of revenue pool, at State level, that would arise out in the first 5 years as a consequence of the GST tax structure implementation.
The Service Tax will go up from 15% to 18% however the final decision regarding the tax rate to be charged on gold has been put on hold till further notice.
The tax rates finalised today needs to be approved by the Parliament in the upcoming winter session that begins from November 16th this year. Only after receiving a nod from the Parliament will the above indirect tax regime be implemented across the country from the next financial year.