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APPROVAL OF GST RATES BY COUNCIL

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 10-11-2016 - The GST Council in its fourth sitting on 3-4 November, 2016 zeroed in at the GST rates with consensus amongst all the states and the centre. The tax rates have been set in a four slab tax structure of 5 percent, 12 percent, 18 percent and 28 percent with lower rates for essential items and higher rates for luxury and demerit goods. Such items may also attract an additional cess to create a corpus for funding requireme .....

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known. Simply putting all services in 18% slab shall result in overall inflation impact as all services will become costly by three percent straight. It may be a good idea to have two baskets of tax rates for services. Certain essential services may be placed under 12% and others in 18% slab. Services like health care, life insurance, coaching etc. deserve to be either exempt or at best be under 5% slab. Multi rate structure will bring in classification issues leading to tax disputes and hence, .....

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o 12% and 18% tax which still will be lower than the existing tax impact (central excise plus service tax). The overall tax rate structure may lead to inflation as services shall become costlier unless the Government decides to put them in 12% bracket, which is unlikely. Having more than one rate for services will also complicate GST tax structure. The proposed rate structure may result in operational cost reduction, efficiency gain, lower logistics cost but higher level compliances in smaller c .....

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