04 November 2016 Current Affairs GK: The GST council has approved four tier tax structure of 5, 12, 18 and 28 percent under the proposed Goods and Services Tax (GST).
There will be two standard tax rates- 12 percent and 18 percent under the GST. Under the tax structure of 5, 12, 18 and 28 percent, the lower rates will be applicable for essential items and the highest for luxury and de-merits goods that will also attract an additional cess.
Highlights : Essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate. The lowest rate of 5 percent will be for common use items while there will be two standard rates of 12 and 18 percent under the Goods and Services Tax (GST) regime.
Most white goods like washing machines, air conditioners, refrigerators, shampoo, shaving stuff and soap will be taxed at 28 percent (with riders).The highest tax slab will be applicable to items which are currently taxed at 30-31 percent (excise duty plus VAT).
Demerit goods or sin goods such as luxury cars, pan masala, aerated drinks, and tobacco and tobacco products, will invite a tax of 28 percent plus the cess which could vary between 40 percent and 65 percent. There has been no consensus yet on tax rate for gold.
The collection from this cess as well as that of the clean energy cess will create a revenue pool which will be used for compensating states for any loss of revenue during the first five years of implementation of GST. The cess will be lapsable after five years.
Goods and Services Tax : The GST is a single indirect tax, which will subsume most of the Central and State taxes such as the Value Added Tax (VAT), excise duty, service tax, central sales tax, additional customs duty and special additional duty of customs.
The Tax was formed through the Constitution 122nd Amendment) (GST) Bill, 2014This bill was passed by both houses of Parliament in August 2016 and was ratified by 19 states. The bill needed ratification by the legislative assemblies of at least 50 percent of the states.
The states that ratified the bill include Assam, Bihar, Jharkhand, Chhattisgarh, Himachal Pradesh, Gujarat, Madhya Pradesh, Delhi, Nagaland, Maharashtra, Haryana, Sikkim, Mizoram, Telangana, Goa, Odisha, Rajasthan, Arunachal Pradesh and Andhra Pradesh.