The decision was arrived at the day one of the two-day GST council meeting overcoming opposition from some states. Four-tier GST rate structure is finalized at 5%, 12%, 18%, and 28% which was earlier proposed to be 6%, 12%, 18%, and 26%. Goods and Services Tax regime (GST) is set to be rolled out from April 1, next year.
Essential items such as foods will be taxed at zero rate, whereas luxury goods will attract highest rates and additional cess. The necessary daily use goods are put in the 5% tier the lowest rate. Most of goods and services would be taxed at standard rates of 12% and 18%, making most services costlier as those were earlier taxed at 15%. Luxury cars, pan masala, aerated drinks, tobacco are in the highest tax slab, additional cess will be levied on these items for a period of five years. The GST council will review the revenue raised from the cess annually which is expected to yield Rs 50,000 revenue to the government compensating the revenue loss for states.
The allocation of items into different tier will be finalized by a committee comprising of state and central government officials.