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GST Council finalises tax rates on 80-90% goods, services

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On May 18, 2017, the Goods and Services Tax (GST) Council headed by Union Finance Minister Arun Jaitley and comprising representatives of all states has finalised tax rates on 80-90% of goods and services under four brackets (5%, 12%, 18% and 28%). Essential items of daily use have been kept in the lowest bracket of 5%.

  • The GST Council also approved 7 set of rules for the Goods and Services Tax (GST) regime that will be rolled out from July 1, 2017.

GST Rollout in India:

  • GST will replace 16 current levies (7 central taxes and 9 state taxes), consequentially creating India as one market with one tax rate.
  • Arun Jaitley has specifically mentioned that there will be no inflationary impact post the roll out of GST.
  • GST rates for 1205 out of 1211 items have been finalised so far.
  • GST rates on six categories of products—gold, bio-diesel, beedi and cigarettes, footwear, textiles and agricultural implements—will be finalised in council’s next meeting scheduled to be held on June 3, 2017 in Delhi.

Items – Tax Brackets:

Percentage of itemsTax Bracket
14% out of total items5%
17% of total items12%
43% of total items18%
19% of total items28%
7% of total itemsExempted

About Goods and Services Tax (GST):

The GST is a destination-based, single indirect tax that will be levied on consumption of goods or use of services across India. It is considered as biggest tax reform since independence in 1947.

  • GST is already prevalent in Germany, France, Italy, United Kingdom, South Korea, Japan, Canada and Australia.
  • GST was first implemented in France (in year 1954).
  • Russia implemented GST in 1991 while China did it in 1994.
  • Saudi Arabia is planning to implement GST in 2018.