Four-tier GST rate structure finalised: Arun Jaitley

03 November, New Delhi

Goods and Services Tax (GST) Council has finalised four-tier GST rate structure of 5, 12, 18 and 28 per cent.

Briefing reporters after the GST council meeting, Finance Minister Arun Jaitley said, five percent tax will be levied on mass consumption items used by common people.

Jaitely said, to safeguard the interest of poor and keeping inflation under check, half the items in Consumer Price Index basket like foodgrains, would not be taxed at all.

He said, luxury items like high-end cars and demerit goods including tobacco and aerated drinks, will be taxed at the highest rate and would also attract a cess in a way that the total incidence of tax remains at almost the current level.

Jaitley said, the items which are taxed at present at the rate 30 to 31 percent will now be taxed at 28 per cent. He also said, some of the luxurious items will be transferred to 18 per cent tax bracket.

Jaitley said, fifty thousand crore rupees will be required to pay to states for loss of revenue in the first year of GST rollout.

Compensation pool would be for five years. Surplus amount in the pool will be shared on the basis of formula determined by the GST Council. The meeting will continue tomorrow to deliberate upon remaining issues.