Free Press Journal

Compensation for states: GST Council finally takes first step

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New Delhi: A four-slab GST tax structure of 6, 12, 18 and 26 per cent with lower rates for essential items and the highest for luxury goods that will also be levied with an additional cess was mooted on Tuesday at the GST Council meet.

The all-powerful GST Council, headed by Finance Minister Arun Jaitley, on Day 1 of its three-day meet reached consensus on the formula for payment of compensation to states from any loss of revenue from implementation of Goods and Service Tax (GST) in the first five years beginning April 1, 2017.

With a view to keep inflation under check, the proposal sponsored by the Centre proposed to continue exempting food items from tax as well as keep 50 per cent of the common use goods in either exempt category or lower band.


But ultra-luxury items like high-end cars and demerit goods like tobacco, cigarettes, aerated drinks, luxury car and polluting items would attract an additional cess on top of the 26 per cent GST rate.