New GST rates to range from 5 to 28 per cent

Story By: Rajesh Sharma
Friday, November, 04 2016 - 12:47

The government on Thursday has agreed on rate and scope of Goods and Services Tax (GST).

The Finance Minister Arun Jaitley said that the new GST will range from 5 to 28 per cent in a four-bracket structure set at 5%, 12%, 18% and 28% for different items or services.

 The brackets are steeper than the rates of 6, 12, 18 and 26% earlier proposed by the government.The essential items including food will be taxed at a zero rate.

The lowest rate of 5 per cent would apply to common use items while the peak rate of 28% will apply to luxury goods.Luxury cars, tobacco products and aerated drinks will attract an additional cess on top of the highest tax rate which will be used to compensate states for any loss of revenue during the first five years of the implementation of GST, Mr Jaitley said.

The tax rate must be now be approved by parliament, which meets from November 16 for the winter session.

Parliament has to pass two bills related to GST in the winter session to be on track to roll out of the new indirect tax regime from April 1 next year.

The long-delayed tax, which would transform Asia's third largest economy into a single market, could boost revenues through better compliance while making life simpler for business that now pay a host of federal and state levies.


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