Five different rate structures were presented to GST Council:FM Arun Jaitley
(By Vinay Pandey, ET Bureau | Updated: Oct 18, 2016, 08.27 PM IST)
NEW DELHI: Finance Minister Arun Jaitley has said at least five different rate structures were presented to the GST Council on the first day of the three day deliberations.
The discussions will continue tomorrow. One of the options is standard rate of 18% and a high rate of 26%. A committee headed by chief economic advisor Arvind Surbamanian has suggested a four rate structure with standard rate of around 18%, a lower rate of 12%, 26% for precious metals and a demerit rate of 40%.
FM said the rate should be such that it does not add to the consumer inflation while at the same time protects the revenues of the states and the centre.
The GST Council managed to sort out the details of the compensation to the states on account of any loss incurred due to the roll out of the Goods and Services Tax (GST).
Food items are proposed to be exempt from the tax and 50 per cent of the items of common usage will be exempt to keep the inflation under check. The lower rates would be levied on essential items and the highest for luxury and demerit goods.
The cess would help create a compensation fund to help compensate states for any loss of revenue from implementation of the new indirect tax regime that will subsume a host of central and state taxes including excise duty, service tax and VAT.
Kerala Finance Minister Thomas Issac said his state government wanted the highest rate to be fixed at 30 per cent so that common man items can either be exempt or levied with lower tax rates.
The compensation to states would be “limited to taxes subsumed into GST,” he said.