Finally, GST council stick to the four-tier rate structure of 5,12,18,28 percent. The council in its two days meeting has been striving for these rates for several months and now completed the discussion with these rates along with some modification of center’s proposal. The highest rates for other FMCG products are being stricken at 6, 12, 18 and 26 per cent.
Finance Minister Arun Jaitley stated, “We have been able to finalize the GST rate structure. Zero-tax rate to apply to 50 per cent of items in the Consumer Price Index basket, including grains used by the common man. Five per cent duty will be levied on items of mass consumption used by common people”
“Two standard rates of 12 and 18 per cent will be there in GST. Items taxed at 30-31 per cent [excise plus VAT] will be taxed at 28 per cent. Additional revenue from highest tax slab to be used to keep essential use items at 5 per cent and transferring common use items to 18 per cent.”
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“Luxury cars and demerit goods to be levied with a cess, which along with clean energy cess, will be used to compensate States for loss of revenue. Compensation pool created through cess will be for five years. Rs. 50,000 crore is required to be paid to States for loss of revenue in the first year of GST roll-out.”