Sealing the Goods and Services Tax (GST) rates for almost all items, the GST Council on Saturday cleared all the pending rules, including transition provisions and returns, with all the States who agreed to July 1 rollout for the historic tax regime in the country.
The GST Council, chaired by Finance Minister Arun Jaitley, decided to tax gold at 3 per cent, footwear below Rs500 at 5 per cent, biscuits at 18 per cent and some other daily-used items under the GST and the Council is scheduled to meet again on June 11 before the roll out of the new tax regime.
The GST Council had last month fitted over 1,200 goods and 500 services in the tax brackets of 5, 12, 18 and 28 per cent. The Council at its 15th meeting decided on rates of yarns, agriculture machinery, apparels and rough diamonds among others.
“We have finalised the GST rules regarding transition and return filings. The council was also apprised of the IT preparedness which is necessary for the successful rollout of the GST. The GSTN made a detailed presentation on the amount of work done and IT preparedness,” Jaitley said after the Council’s meeting.
Jaitley further said footwear costing below Rs 500 would be taxed at 5 per cent, while that above this amount would attract 18 per cent levy. Currently, footwear priced from Rs 500-1,000 attracts 6 per cent excise duty. Besides, States levy VAT on it. “As regards readymade garments, they will attract a levy of 12 per cent. Solar panels will be taxed at 5 per cent under the GST. However, Tendu leaves and bidis would be taxed at the rate of 18 per cent and 28 per cent respectively,” the Finance Minister said, adding, there will be no cess on bidis.
On the other hand, the Council has also decided that rough diamonds will attract a levy of 0.25 per cent. “For footwear and textiles, a major concession has been given and the items being used by the common man will be taxed at low rates,” said Jaitley.
The GST, however, will subsume all major levies including excise, service tax and VAT, unifying 16 different taxes, and make India a single market.
As for the transition rules approved by Council, the industry had been demanding some relaxation of the provision of deemed credit. The draft transition law provided that once GST is implemented a company can claim credit of up to 40 per cent of their Central GST dues for excise duty paid on stock held by businesses prior to the rollout.
However, several dealers are choosing to wait and watch rather than buy and hold on to inventories. They have lobbied with the Government seeking an increase in the credit limit.