The second day of 14th GST Council Meeting, chaired by Finance Minister opened today morning with services and handful of commodities on its agenda. The Council will fix the taxation rates of these items under one of the four slabs mandated in the GST Act.
Finance ministers of some states have called for categorising the basic services under one of the two lower slabs on grounds that placing them in higher slabs will make it difficult for the common man to bear them.
The GST Act allows fours tax slabs - 5 per cent, 12 per cent, 18 per cent and 28 per cent. Moreover, Government has asserted in the past that services with higher abatement will be placed in one of the lower tax slabs under GST.
GST rates to be decided for precious metals gold, silver
Apart from services, the GST Council will also decide on precious metals gold, and certain other goods that were not taken up in the first day of the meeting. As for gold, Kerala Finance Minister Thomas Issac presented a case for taxing the yellow metal at 5 per cent instead of 4 per cent, as proposed by the Centre. On the opening day of the meeting, he argued that gold is not a daily use commodity and placing it under lower tax slabs will not benefit those belonging to the lower economic strata.
GST rates to be decided for biscuits, footwear, packaged cereals
In addition to this, the Council will also take up biscuits, footwear, packaged cereals and more. Tax rates for most of the commodities were fixed on the first day itself, with around 81 per cent of the commodities taken up yesterday being placed under the 18 per cent tax slab. The GST rates for all but six items were finalised at the first day, headed by Union Finance Minister Arun Jaitley and comprising state representatives.
With the rollout of GST, foodgrains will cost less as the GST Council yesterday decided to exempt the daily-use commodities from the levy. Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from GST. Currently, some states levy Value Added Tax (VAT) on them.
Milk, sugar, rice exempted
Common use products like hair oil, soaps and toothpaste will be charged with a single national sales tax or GST of 18 per cent instead of present 22-24 per cent tax incidence through a combination of central and state government levies.
Milk and curd will continue to be exempt from taxation when the Goods and Service Tax (GST) replaced current indirect taxes. Sweets will attract 5 per cent levy. Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 per cent, almost the same as current incidence.
Prime Minister Narendra Modi has called for measures to ensure timely rollout of GST, which is scheduled on July 1 this year.