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 items||Tax Bracket|
|14% out of total items||5%|
|17% of total items||12%|
|43% of total items||18%|
|19% of total items||28%|
|7% of total items||Exempted|
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.