A four-tier structure for Goods and Services Tax (GST) comprising a lower rate of 6 percent, two standard rates of 12 percent and 18 percent, and a higher rate of 26 percent with an additional cess for luxury and demerit goods were proposed in the third meeting of the GST Council.
Ultra-luxury items like high-end cars and demerit goods like tobacco, cigarettes, pan masala and aerated drinks, comprising about 25 percent of the taxable base, would attract an additional cess over and above the higher rate of 26 percent, Revenue Secretary Hasmukh Adhia said after the meeting.
Union Finance Minister Arun Jaitley said: “The broad approach has been that the rate structure should be such that it does not lead to any further CPI inflation, states should have adequate revenue and so also the Centre, so as to discharge their obligations and this has to be blended with only the least possible burden which has to be put on the taxpayer. The revenue model should be such that it has some additional resources which could be used for revenue payment, for compensation payment to any losing state.”
“So far between the last two meetings and today, we have been, one by one, reaching a consensus on each issue and so far, all decisions have been taken by consensus. And the object is to keep on discussing and re-discussing even when there is no agreement on the first instance and take as many decisions possible by consensus and to the extent possible, avoid a situation where we have to put an issue to vote. So far, we have achieved that objective,” he said.
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