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GST Council fixes four-tier rate structure at 5 12 18 and 28

Goods and Services Tax - GST - By: - Bimal jain - Dated:- 5-11-2016 Last Replied Date:- 6-11-2016 - Dear Professional Colleague, Moving swiftly on the road to formalising the biggest reform of the indirect tax regime, the Goods and Services Tax ( GST ) Council on November 3, 2016, has decided four-tier GST tax structure of 5, 12, 18 and 28%, with zero rate for essential items and the highest for luxury and de-merits goods that would also attract an additional cess. With a view to keeping inflati .....

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plicable to items which are currently taxed at 30-31% (Excise duty plus VAT). Luxury cars, tobacco and aerated drinks would also be levied with an additional cess on top of the highest tax rate. The collection from this cess as well as that of the clean energy cess would create a revenue pool which would be used for compensating States for any loss of revenue during the first five years of implementation of GST. The cess, he said, would be lapsable after five years. The 4-tier rate tax structure .....

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levy a 4% GST on gold, a final decision was put off… Shri. Jaitley said. He further added that individual items which will fall under different tax slabs will be decided later. Conclusion: One of the critical aspect for successful implementation of GST relate to the determination of GST rate, which is revenue neutral i.e. RNR. Dr. Arvind Subramanian, Chief Economic Advisor, said that the rate structure is revenue neutral but there are going to be efficiency gains which could finance some .....

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tems. On levying of additional cess, Dr. Subramanian said that the cess is only on four commodities - aerated beverages, luxury cars, tobacco and pan masala. It may not be out of place here to mention that imposition of cesses in GST regime (which would be outside the GST), would hamper the free flow of input tax credit and continue the age old legacy of tax cascading in GST regime as well. Comparison of rates under various Indirect tax levies, at present, along with decided standard rates of 12 .....

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%, it is likely that GST might see significant reduction in the prices of the specified goods with corresponding reduction in production cost with standard tax rate at 12%/18% against 26-30% at present. On services - Currently, w.e.f. June 1, 2016, rate of Service tax is 14% plus Swachh Bharat Cess at 0.5% and Krishi Kalyan Cess at 0.5%, totalling to 15%. Though, Shri. Jaitley didn't elaborate which tax rate will apply to services, apparently, with GST standard rate at 18%, services in GST r .....

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