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Not many changes in GST rates, say officials

Saturday, March 18, 2017, 15:00 Hrs  [IST]

As per a report in Business Standard, there will not be many changes in the goods and services tax (GST) rates compared to what’s prevailing in the current indirect taxation regime, according to officials. They also said the rates would not be inflationary because food grains are likely to be exempted. The next big thing in the GST regime will be rules and the item-wise rate structure. “We don’t want to make many changes in rates for goods under the new GST rate structure,” an official said.

Another official said there would be a smooth landing for the industry with respect to the rates. GST rates would be done to ensure that the consumer price index (CPI) did not spike. “We will do calculations to see to it that rates don’t lead to consumer price inflation,” he said. The GST Council, an official said, would decide if cesses over the peak rate of 28% should continue after five years. All other cesses will be subsumed in the GST. The official said the Centre would lose some revenue due to the abolition of cesses. Hotels will attract an 18% rate, while those with a turnover of up to INR 50 lakh will attract 5%. The Council has approved four tax slabs— 5%, 12%, 18% and 28% — and cess over the peak rate.

On Thursday, the Council approved caps on cesses, which would range from 15% in the case of luxury cars and aerated drinks to 290% in the case of cigarettes. However, the actual cesses will be lower and at the rate that will ensure that the aggregate tax incidence is equal to the one under the current taxation regime. The GST Council will next take up rules at its meeting on March 31. After that, a committee of officers will start an exercise of fixing item-wise rates.

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