Srinagar, May 18: The Goods and Services Tax (GST) Council Thursday decided the tax rates for 1,211 items, a majority kept at 18 per cent, though the rates on gold and beedi remained undecided.
“There is no increase in taxes of the items considered today. In fact, for many of them, taxes have come down,” Finance Minister Arun Jaitley told the media here after the first day of the GST Council meet.
Revenue Secretary Hasmukh Adhia said that an overwhelming 81 per cent of items will attract tax of 18 per cent or below. Only 19 per cent of items will be taxed at the highest rate of 28 per cent, he said.
The fitment of only six categories of goods remain to be decided, including gold, beedi and cars.
The Finance Minister said food items, including cereals, will become cheaper as they have been kept under the exempt category to which milk is also proposed to be added.
The panel will discuss tax rates for gold and some other items on Friday and could meet one more time if necessary to decide rates on remaining items.
Under the new tax, rates will range from 5 to 28 percent, with 12 percent and 18 percent being the standard rates.
Most raw food items including milk will be exempted from tax while the panel still has to finalise rates for processed food items. Jaitley said the rates on the remaining items will be decided in the Council’s meeting Friday.
“The Counicl may meet again if final rates are not decided tomorrow (Friday).”
Jaitley said that while the overall basket of taxes will see a reduction, he hoped for greater tax buoyancy because of greater efficiency and less tax evasion.
“In the overall basket there will be a reduction… but because of greater efficiency and less tax evasion there will be revenue buoyancy and tax collection will go up,” he said.
Around 400 items are currently exempt from excise and VAT under the existing indirect tax regime.
With the government announcing that 7 per cent of items will remain under the exempt category, the number of items which enjoy zero per cent tax will come down drastically.
Items like hair oil, toothpaste and soaps, which are now taxed at 28 per cent, will be taxed at 18 per cent under GST. Sugar, tea, coffee (except instant), edible oil and coal will attract 5 per cent tax.
Jaitley also announced that seven rules for GST have been decided while the Council will take up the ones on transition and returns Friday. Agencies