Centre, States agree on GST formula

a. Green

b. Sin

c. Bond

d. None of the above

 

India took a step forwards rolling a unified Goods and Services Tax with the Centre and states agreeing on a 4 slab structure– 5,12,18 and 28 percent–along with a cess on luxury and sin goods such as tobacco.

• The Centre had proposed a 4 tier system- 6,12,18 and 26 percent along with a 4 percent levy on gold.
• The final rate structure had brought down the lowest slab by one percentage point to 5 percent while raising the highest rate by 2 percentage points to 28 percent.
• Around 50 percent of the items in the retail inflation basket primarily food items will be kept out of GST.
• There will be zero tax on such items.
• A lower tax slab of 6 percent is proposed for those essential commodities on which no excise duty is levied at present by the Centre but a 5 percent VAT is levied by the states.
• There will be two standard rates of 12 and 18 percent which will be applicable to many taxable goods.
• Effective tax on most white goods such as refrigerators is between 30 to 31 percent including 12.5 percent central excise duty, state value added tax of 14.5 percent and cascading effect of about 4 percentage points.
• Following GSTm the effective tax rate on most of the goods will come down to 28 percent.
• Additional revenue generated by raising the peak rate from the earlier proposed 28 to 28 percent will be set off against the revenue loss from slashing the lowest rate to 5 percent from 6 percent.
• The number of goods were transferred from the 28 percent to the 18 percent category.
• A decision on tax on gold has been left aside for now.

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