GST Council finalising tax rates on 80-90% of goods, services

GST Council finalising tax rates on 80-90% of goods, services

He said the Odisha Goods and Service Tax Bill provides provision to levy tax on all inter-state supplies of goods or service except supply of alcoholic liquor for human consumption at a rate to be notified as recommended by the Goods and Service Tax Council.

"J&K is not a producing state, it is a consumer state and as GST is a production based tax, J&K's tax revenue will increase with the new GST regime", he said.

Making further progress on rolling out the Goods and Services Tax (GST) by July 1, the GST Council on 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.

While it is too early to say how gold and jewellery will be taxed under the GST, states like Kerala have asked for a 5 per cent tax on bullion. Most raw food items including milk will be exempted from tax while the panel still has to finalize rates for processed food items. What is the big trouble with a 5 per cent tax on jewellery. Items like hair oil, toothpaste and soaps, which are now taxed at 28 per cent, will be taxed at 18 per cent under GST.

Imported goods will be subject to Integrated Goods and Services Tax (IGST), which is equivalent to Central GST + State GST so as to bring equality with taxation on local products, the finance ministry had said in a recent upate. Arun Jaitley has said that the cess would be levied on sin goods and luxury goods, and will be used to fund compensation to states for their losses.

Even cereals prices will witness a climb down as they have joined the exempt category compared to the 5 per cent tax rate levied on them.

Filter and non-filter cigarettes not exceeding 65 mm will attract cess of 5 per cent plus Rs 1,591 per 1000 sticks. "Another aspect encountered and accepted by most of the GST countries lies in the statistic that GST will be inflationary, especially if the effective tax rate is higher than what prevailed before".

Jaitley said the key feature of today's rate decision has been that "tax rate under GST will not go up for any of the commodities". "On several commodities, we consciously brought down the tax rate". "That despite reduction the revenue neutrality and tax buoyancy thereafter would be maintained", he added.

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