GST Council finally announced tax rates for GST. There will be 4 rates for GST which have been put in place keeping in mind the necessity and importance of goods and services. November 4, 2016 was the day when the council could finally reach a consensus regarding the rates at which different goods and services could be taxed. As proposed in the previous meetings held on 17th and 19th October, the number of slabs have remained the same but the rates have been changed.
The final proposed rates are as follows:
1) Lowest slab of 5% for commonly used goods
2) Standard slab of 12% on substantial goods
3) Middle slab of 18% on rest of goods
4) Highest slab of 28% on luxury and demerit goods
Other than these 4 slabs, there are some products on which no GST will be charged. Almost 50% of the products in the Consumer Price Index like food products have been kept out of GST net to give relief to poor and lower middle class. This move is expected to The peak tax rate of 28% will be applicable on luxury and demerit goods like luxury cars, tobacco, alcohol etc. while the lowest slab rate of 5% will be charged on commonly used goods. Demerit goods will also attract a cess which will bring the overall tax to 40%. The council on GST has not yet been able to finalize the rate for precious metals.
So far the rates have only been proposed for goods. The next step for the government is to classify goods under each slab and finalize the rates for services.