GST Council likely to do away with 5% rate

PTI

New Delhi, April 17

With most states on board to raise revenue so that they do not have to depend on the Centre for compensation, the GST Council at its meeting next month is likely to consider a proposal to do away with the five per cent slab by moving some goods of mass consumption to three per cent and the remaining to eight per cent categories, sources say.

At present, GST is a four-tier structure of 5, 12, 18 and 28 per cent. Besides, gold and gold jewellery attract three per cent tax.

In addition, there is an exempt list of items such as unbranded and unpacked food items which do not attract the levy.

The sources say that in order to augment revenue, the council may decide to prune the list of exempt items by moving some of the non-food items to the three per cent slab.

Discussions are on to raise the five per cent slab to either seven or eight or nine per cent, a final call will be taken by the GST Council which comprises finance ministers of both the Centre and states.

As per calculations, every one per cent increase in the five per cent slab, which mainly includes packaged food items, would roughly yield an additional revenue of Rs 50,000 crore annually.

Although various options are under consideration, the council is likely to settle for an eight per cent GST for most items that currently attract five per cent levy. —

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