Revenue secretary Hasmukh Adhia said that 81% of the items will attract a tax of 18% or below while the remaining 19% will attract the highest tax slab of 28%
Goods and Services Tax (GST) Council has fixed tax rates for 1,211 items, of which 81% will attract 18% tax.
The GST Council fixed the tax rates ranging from 5% to 28% -- with 12% and 18% being the standard rates. The council will discuss tax rates for six items including gold, beedi and cars along with services today.
"There are 1,211 items in the code. For the full day, we took up each item and discussed. Except six categories on which discussions are still continuing, we have approved the others. We will continue discussions tomorrow," Union finance minister Arun Jaitley told reporters on the first day of the GST Council meeting.
Revenue secretary Hasmukh Adhia said the 81% items will attract a tax of 18% or below while the remaining 19% will attract the highest tax slab of 28%.
Most raw food items, including milk, will be exempt from tax while the rates for processed food items are yet to be finalised. Sugar, tea, coffee and edible oil will attract the tax rate of 5%. Even coal will attract tax at 5%, along with a levy of Rs 400 per tonne.
Rates for gold, footwear, branded items, bidi and packaged foods will be fixed today.
On top of the peak rate, small cars will attract a 1% cess, mid-sized cars will attract 3% and luxury cars 15%.
On gold, states demanded a 4% tax even though the rate is not among the 5%, 12%, 18% and 28% approved bands.
About 7% of the items fall under the exempt list while 14% have been put in the lowest tax bracket of 5%.
Another 17% items are in 12% tax bracket, 43% in 18% tax slab and only 19% of goods fall in the top tax bracket of 28%.
Jaitley said there will be no inflationary impact as most of the rates which are at 31% have been brought down to 28%.
He 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. There is no increase. On many commodities, there is a reduction particularly because the cascading effect of the tax is gone."
"Of several commodities, we have consciously brought down the tax. In the overall basket, there would be a reduction, but we are banking on the hope that because of a more efficient system, evasion would be checked and tax buoyancy would go up.
That despite reduction the revenue neutrality and tax buoyancy thereafter would be maintained," he said.
"We took up seven different rules for consideration which were approved on two of the rules. The legal committee which vets them is at work. As soon as it finishes, we will be taking up those rules also. One of the rules is related to transition provision and the second is related to returns", said the Union finance minister.
Jaitely said the ministers discussed the categories threadbare through the day and have made headway on these issues. "We have been deciding each category of items. We made considerable headway in those times. Tomorrow we will continue the discussion on balance services items," he said. Jaitley also kept the window open for further meetings if the deliberations remain inconclusive on Friday.
"If any part of good and services is not concluded, the council may once again decide a date to complete the discussion", he said.
With PTI inputs
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Most raw food items, including milk, will be exempt from tax while the rates for processed food items are yet to be finalised. Sugar, tea, coffee and edible oil will attract the tax rate of 5%. Even coal will attract tax at 5%, along with a levy of Rs 400 per tonne.
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