Published: Mon, November 07, 2016
Global Media | By Abel Hampton

Political push needed to fix GST jurisdiction: Jaitley

Asked about the incidence on automobiles, Jaitley said: "There is a difference between cars and luxury cars". We want everyone to come around on all issues. The new structure for goods is only a replica of the current one - which includes VAT rates of 5% and 14.5% and many excise rates including the median rate of 12.5% and the service tax rate of 15%.

It also enables the central government to set apart a fund by which states will be compensated, he said.

He said the members now needed to discuss four draft bills - Central GST, State GST, Integrated GST and state compensation matter for revenue losses - and that would come up at the next council meeting on November 24-25.

The cess would lapse after five years and any surplus to the cess pool at the end of 5 years would be shared between the Centre and states.

The Centre would be keen on the four-tier structure - 8, 12, 18 and 26 percent - the last being the tax rate for consumer durables.

Jaitley announced the slabs in the GST council meet.

A signature reform of Prime Minister Narendra Modi, it aims to harmonise a slew of federal and state levies.

Explaining the tax structure, Jaitley said foodgrains used by common people would be at zero-rate so that the impact of inflationary pressure on them is the least.

As per the structure proposed by the GST Council today, there will be two standard rates of 12 percent and 18 percent imposed when the Goods and Services Tax legislation is implemented. White goods and similar products will face 28% tax, instead of 26% suggested by the Centre earlier.

Third slab is 18% tax, under which items such as soaps, oil, toothpaste, refrigerator, and smartphones have been included. Keeping these in mind we need slabs.

The finance minister also said that several items will be transferred to 18 percent bracket from 28 percent now. For instance, at the Centre, there is incomplete provision for input tax crediting for goods - as well as incomplete cross-crediting - between goods and services. "After the rest of the items are fitted into various slabs, depending on the revenue flexibility, the rate will be decided", Jailtey said. "Therefore, the decision to continue Clean Environment Cess on coal etc. for compensation to all the states has been opposed by us", said the release.

The finance minister said 50 percent of the goods comprising the CPI basket will attract no tax.

"Multiple registrations in each state for supply of goods and services have the potential to result in huge burden of complexity as companies operate in many different states".

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