New Delhi:
The centre hopes to win the support of states on the
fundamentals of the new Goods and Services Tax or GST - including its
main rate.
1. The
decision-making body of the GST Council, which consists of Finance
Minister Arun Jaitley and his counterpart from each state, is meeting in
three-day session which ends tomorrow. 2. The GST does away with levies charged when goods cross state lines and unifies India into a single market.
3. The centre has suggested four tax slabs with the lowest at 6 per cent and the highest at 26 per cent, which would apply to about a fourth of taxable items.
4. The slabs proposed are: 6, 12, 18 and 26 per cent. Food items should be exempt to keep inflation in control, the centre has suggested. FMCG and consumer durable products would be taxed at 26 per cent, against 31 per cent currently.
5. For luxury goods like fancy cars, cigarettes and soft drinks, an additional cess over the 26 per cent rate has been mooted.
6. States like Kerala want a higher tax for luxury items and a lower rate for common usage goods.
7. The centre has agreed to compensate states for five years for the revenue they will lose when GST subsumes their levies. The extent of compensation remains a contentious issue.
8. Some states have also objected to the fact that 11 lakh businesses that currently pay service tax will continue to be assessed by the centre rather than them, which they say is unfair and eats into their power. The centre says that over time, officials in states will be trained to take over.
9. The centre wants to reach consensus at this meeting so that it can present the agreed upon tax rate and scope to parliament which meets next month.
10. If no agreement is managed, a smaller group of Finance Ministers may be assigned to resolve differences.
Source: NDTV
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