GST Council finalises 4-tier rate structure

Union Finance Minister Arun Jaitley has said that half the items in Consumer Price Index basket like foodgrains, would not be taxed at all under Goods and Services Tax,GST. The move aimed at safeguarding the interest of the poor and keeping inflation under check,he added. Briefing reporters after the GST council meeting yesterday, Finance Minister said five percent tax will be levied on mass consumption items used by common people. 

Earlier in its meeting yesterday,Goods and Services Tax (GST) Council finalised four-tier GST rate structure of 5, 12, 18 and 28 per cent. Mr. Jaitley said luxury items like high-end cars and demerit goods including tobacco and aerated drinks, will be



taxed at the highest rate and would also attract a cess in a way that the total incidence of tax remains at almost the current level. 

Mr Jaitley said, the items which are taxed at present at the rate 30 to 31 percent will now be taxed at 28 per cent. He also said, some of the luxurious items will be transferred to 18 per cent tax bracket. Mr Jaitley said, fifty thousand crore rupees will be required to pay to states for loss of revenue in the first year of GST rollout. Compensation pool would be for five years. Surplus amount in the pool will be shared on the basis of formula determined by the GST Council. The meeting will continue today to deliberate upon remaining issues.