GST council’s sub-panel to fix tax rates of goods, services by weekend2 min read . Updated: 03 May 2017, 01:26 AM IST
GST council's rate fitment committee to discuss aligning all goods and services to different slabs in three-day meeting starting 4 May
New Delhi: The goods and services tax (GST) council’s rate fitment committee will deliberate in the capital for three days starting 4 May to align all goods and services to different slabs and decide on bringing more items currently out of indirect taxation at central and state levels into the unified tax net.
A member of the committee, which comprises central and state tax officials, said on the condition of anonymity that the tax rate alignment will be more or less final at the end of the meeting.
“We shall do this exercise in such a way that there is little work left to be done or time required to be spent by the Council in giving its stamp of approval," said the person. The council is set to meet for two days from 18 May in Srinagar and approve the rates so that the tax reform can be rolled out from 1 July.
The goal the fitment committee is pursuing is to place goods and services into slabs that would match their closest effective tax rate at present. That would involve taking into account the reliefs given at present in the form of abatement—applying the tax rate on a partial value of the sale and the inefficiencies in the current tax system, especially on inter-state supplies, that increases effective tax outgo. The idea is to make the transition revenue neutral.
While services may be taxed at two slabs, 12% and 18%, goods are to be taxed at five different rates—5%, 12%, 18%, 28% and 28% plus cess. “There may be a special rate for gem and jewellery outside the other slabs, which could be anything between 2% and 5%. The GST Council will deliberate on this separately," revenue secretary Hasmukh Adhia said at a workshop on GST last week.
At the fitment committee meeting, officials will seek to bring more items into GST that currently enjoy central excise duty and state value added tax (VAT) exemptions. At present, around 99 items enjoy exemption from VAT, while about 250 items are exempted from central excise duty. Under the new regime, there will be a common list of GST exemptions, which are in the nature of essential items of everyday use like foodgrain.
This list of exemption is different from the five hydrocarbons temporarily kept out of GST and liquor that is constitutionally excluded as these would continue to be taxed by Union and state governments under central excise and state VAT laws (or state excise laws in the case of liquor).
Prime Minister Narendra Modi on Tuesday took stock of the steps taken by the finance ministry for a smooth rollout of GST and the anti-black money drive post demonetisation ban, PTI reported. Finance minister Arun Jaitley and revenue secretary Hasmukh Adhia were present during the meeting, it said.