GST Council Meet to Decide on Tax Rate Oct 18-20,2016

The 3rd meeting of the GST Council, which begins on Tuesday Oct 18,2016

 

According to the proposal under consideration, the rate structure under GST would mirror that under the State value-added tax regime. 

“The rates will be finalised after discussions with the States. A multiple rate structure will give flexibility to States as well as assuage their revenue concerns while keeping away inflationary pressures,” said a person close to the development. 

The Centre hopes to roll out GST from April 1, 2017. Finance Minister Arun Jaitley, who chairs the GST Council, expects to finish all deliberations and finalise the modalities of the tax regime by November 22 so that the GST laws — Centre, State and integrated — can be passed in Parliament in the Winter Session, and by State Assemblies. 

While the idea of varied tax rates has been floating around, consensus seems to be building around a standard rate of 16-18 per cent for services and about 20 per cent for goods. There could be one rate, of 4-6 per cent, for essential commodities, and a higher rate for demerit or ‘sin’ goods.

Apart from the tax rates, the GST Council will take up two issues pending from its last two meetings. One, whether the Centre should retain administrative control over the 11 lakh service tax assessees or share it with the States.

And, two, finalise the formula for the Centre’s compensation to the States after choosing from three-four models for projecting an increase in revenue.

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