19 October 2016 Current Affairs GK: The Union Government has proposed a four-slab rate structure for the new indirect tax regime i.e. Goods & Services Tax (GST) ranging from 0 to 26 per cent. It was proposed at the meeting of the GST Council headed by Union Finance Minister Arun Jaitley and included representatives from all states in New Delhi.
Compensation of states due to loss of revenue after implementation of GST from 1 April 2017. Secular growth rate of 14% will be taken into consideration for calculating the revenue of each state in the first five years of implementation of the GST. Base year for calculating the revenue of states will be 2015-16. States getting lower revenue will be compensated by the Centre. These states will be compensated fund to be created from the Cess on top of the GST on ultra-luxury items and demerit goods. The rate structure will be revenue-neutral so that there is no need to burden consumers with additional tax. It will not lead to further inflation. Good items along with other 50% items of common usage to be exempted from the tax to keep the inflation under check.
The GST is proposed to be levied at 6% (lower rate), 12% (Standard 1 rate), 18% (Standard 2 rate) and 26% (Higher rates) on the goods and services. It will be 0% on host of goods and services, including food, health and education services, and 26% on luxury items, such as fast-moving consumer goods and consumer durables. On consumption of ultra-luxury items and demerit goods, such as big cars and tobacco products, cess must be imposed over and above a 26% GST rate.
The functions of GST Council are mention in Article 279A (4) of the Constitution. The Council will make recommendations to Union and States on important issues related to GST, like (i) Goods and services that may be subjected or exempted from GST. (ii) Model GST Laws. (iii) Principles that govern Place of Supply, threshold limits, GST rates. (iv) GST rates will including the floor rates with bands and (v) Special rates for raising additional resources during natural disasters/ calamities, special provisions for certain States, etc.
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