GST Revamp: Most 12% Items to Come Under 5% Slab
In the revamped regime, majority of the items in the existing 28 per cent tax bracket will be shifted to the 18 per cent slab, and those in 12 per cent slab will fall under the 5 per cent tax slab, top sources said on Friday.
New Delhi:Hours after the Prime Minister Narendra Modi's announcement on next-generation GST reforms, the government on Friday proposed two-rate slab under the new goods and services tax (GST) regime - 5 per cent and 18 per cent. In the revamped regime, majority of the items in the existing 28 per cent tax bracket will be shifted to the 18 per cent slab, and those in 12 per cent slab will fall under the 5 per cent tax slab, top sources said on Friday.
In the current GST structure, the sale of goods and rendering of all the services are taxed in four different slabs -- 5, 12, 18 and 28 per cent. "The revamped GST regime will be game-changer which will not only give a big boost to consumption and offsetting the revenue loss, but also to reduce the tax rate for several categories including agriculture, textiles, fertilisers, auto parts, handicrafts, medical devices and insurance," the sources added.
In the revamped regime, sources said, majority of the items levied with high tax as much as in the existing 28 per cent bracket will come under the 18 per cent slab, and those in 12 per cent slab will fall under the 5 per cent tax slab. "At the same time, petroleum products will continue to remain outside GST regime even in revamped indirect tax structure," the source said.
The source further said that the items and products used by common man in his day-to-day basis will be taxed at 5 per cent, while the GST of 40 per cent will be levied on tobacco products now. "Only around 5-8 luxury items are likely to attract 40 per cent GST and all remaining all other items in 28 per cent slab now will attract 18 per cent GST," the source added.
As per the government's proposal, the sources said that luxury items and sin goods, including tobacco, gutkha and cigarettes will attract a special 40 per cent rate, but will exclude aspirational items like refrigerator, air conditioner and washing machine. "Under this proposal, 99 per cent of the items in the 12 per cent slab will be moved to the 5 per cent slab. About 90 per cent of the items in the 28 per cent will be moved to the 18 per cent slab," the sources added