New Delhi, May 17: The tax that 1.3 billion Indians will pay on buying salt to luxury cars and on services like phone calls to dining out will be decided at the GST Council meet starting Thursday in Srinagar, where a tight security cover has been thrown in view of recent protests.
Srinagar has been chosen as the venue for this crucial GST Council meeting, which will have in attendance Union Finance Minister Arun Jaitley and his ministry officials as well as representatives of 29 states and union territories, to send out possibly a message to the people of Jammu and Kashmir on the importance it holds for the country.
The Council over the next two days will fit most of goods and services in either 5, 12, 18 or 28 per cent tax bracket.
The rates thus fixed will be charged from July 1, the scheduled date for rollout of Goods and Services Tax (GST) — India’s biggest tax overhaul since independence.
The GST will be a national sales tax that will be levied on consumption of goods or use of services. It will replace 16 current levies — seven central taxes like excise duty and service tax and nine state taxes like VAT and entertainment tax — thereby creating India as one market with one tax rate.
Holding of the meeting in Srinagar is not just the Centre’s initiative but many of the states too had demanded way back in February that the Council should meet in Jammu and Kashmir when it decides the tax rates, official sources said.
Since then Germany, Italy, the UK, South Korea, Japan, Canada and Australia have been among the over a dozen nations which have implemented the GST. China implemented GST in 1994 while Russia did it in 1991. Saudi Arabia plans to do it in 2018.
The GST Council in its previous meetings had decided on a four-tier tax structure of 5, 12,18 and 28 per cent. Besides, for demerit and luxury goods, a cess will be levied on top of the peak rate. The cess will be used to compensate the states for revenue loss arising out of the GST implementation in first five years.
The fitment committee comprising central and state officials has worked out fitment of these taxes on various goods and services and the report will be placed before the GST Council at its May 18-19 meeting.
The tax rates will be decided in a fashion to keep their impact on inflation as well as revenues to the government near neutral. PTI
