Goods and Services Tax (GST) Rates in India (5%, 12%, 18% and 28%)
by Agam Gupta 6K
Finally, the wait is over, and after the long-awaited ambiguity over the taxes the GST Council o 4th, November 2016 has finalised the Goods and Services Tax (GST) rate structure to be lies in between 5 % to 28% being a significant step towards implementing the biggest tax reform in the country.
The current Tax structure divided into four slab rates which are 5%, 12%, 18% and 28% and rates on Gold has not been decided till yet but as said by the council it is likely to be on lower side.
The original proposal of the Centre related to rates was in between 5 to 26% which is changed due to the interference of the states as they want the rate to be similar to the current threshold rate for VAT.
Lets’s look Major key takes in the Rates discussion of the council:
For Goods
- Zero Rate good - To keep the Aam Admi Burden free, most of the essential Items of Consumer Price Index including Food grains to be zero rated.
- Under 5% slab, most of the consumable goods consumed by masses would come.
- The rate of 28% will apply to Luxury or consumer goods.
- Sin items like Sports Utility Vehicles, Aerated Drinks, Tobacco, Pan Masala, will attract addition cess over and above the highest rate of 28%.
- This cess would be equal to the difference between the current tax rate and the GST slab of 28% which would help to compensate the loses of state revenue over the period of 5 years.
For Services
- Most services would be taxable under 18% slab which will raise the service provider concerns.
- Services enjoying higher abatement would be put in lower slabs of 12% or 5%.
As the currently finalised structure is welcomed by all the states and the industry. Although, Categorization of Items for each tax slab would be done by officials and will then be approved by the council.
Conclusion
Right now tax slabs are only identified, and categorization of items under each tax slab is pending, but seeing the finalised structure, it can be said that Centre has tried to curb each and every aspect of the successful implementation of this new tax regime in the country.
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