NEW DELHI: The GST council on Tuesday began its three-day meeting with important ground towards fixing the GST rate and the compensation formula being covered on the first day itself.
The finance ministry proposed a four-rate structure for GST, with two standard rates of 12% and 18%. Food items and other necessities would be taxed at 6% while luxury products would be taxed at 26%.
Additionally, a cess is proposed on ultra luxury items, tobacco products and environmentally harmful products. This extra levy will amount to about Rs 50,000 crore that will be used for compensating states.
“The objective is that the rate structure should not lead to any further inflation. The Centre and states should have adequate revenue and it should also put the least possible burden on the taxpayer,” said finance minister Arun Jaitley, at the end of the first day’s meeting, attended by finance ministers of all states.
But rifts continues to surface, with states such as Kerala opposing the structure and rates proposed by the Centre.
{{/usCountry}}But rifts continues to surface, with states such as Kerala opposing the structure and rates proposed by the Centre.
{{/usCountry}}The GST council reached a consensus that compensation to states for any revenue loss would be limited to the taxes subsumed under GST.
Jaitley further said that a 14% growth rate in revenue is projected under GST.