India's newly-minted GST Council, responsible for deciding issues related to the Goods and Services Tax, has proposed a four-tier tax structure with lower rates for essential items and the highest for luxury goods, with the vast majority of goods incurring an 18 per cent tax rate.
Here are some of the proposed tax rates:
Tax Slabs: Overall, GST will cover rates of 6, 12, 18 and 26 per cent, with higher tax set aside for luxury items, which may also attract an additional cess.
Food items: Food goods will be exempt from GST as well about half of everyday items will fall in the lower tax slabs. About 70 per cent of the items will incur an 18 per cent tax rate.
FMCG and consumer durable products: These will attract 26 per cent GST rate, lower than the current tax of about 31 per cent.
Services: These will be taxed at 6 per cent, 12 per cent and 18 per cent, which will be the highest rate. More details are awaited on services.
Ultra-luxury items: These include high-end cars and goods like tobacco, cigarettes, aerated drinks, and polluting items. They will attract an additional cess on top of a 26 per cent GST tax rate. Proceeds from the cess on these items will go toward creating a Rs 50,000 crore fund to compensate states for loss of revenue.
Gold: A four per cent GST rate has been suggested for gold.
With PTI inputs