India: Key Decisions Taken On Day 1 Of The GST Council Meeting

Finalisation of tax rates

• Tax rates of 1,211 items (except six) have been fixed. The items falling under different tax rate slabs are given below.

• Key items which would be exempt under GST are:
  • Milk;
  • Cereals (branded cereals are under deliberation and may be shifted to the 5% slab); and
  • Jaggery.
    
• Key items which would be under the 5% tax slab (essential goods) are:
  • Sugar, tea, coffee (except instant coffee);
  • Edible oil (under deliberation and may be added in the list of exempt goods);
  • Coal (tax under the existing system is 11.69%); and
  • Mithai.
    
• Key items which would be under 18% tax slab are:
  • Hair oil, toothpaste and soap (tax suffered under existing system is 28%);
  • Capital goods; and
  • Industrial intermediates.
    
• Luxury cars are to be taxed at 28% plus cess.
• A decision on the rates of small cars below INR 1 million is likely to be taken tomorrow.
• As per a statement given by the Finance Minister, the rates on all goods have been reduced in GST vis-a-vis the effective tax under the current tax structure.
• The rate of tax on services is to be decided in tomorrow's meeting.

Finalisation of Rules

• Seven Rules have been finalised by the GST Council.
• The Return and Transition Rules are still under examination by the legal team.

SKP's comments

• It appears that the majority of essential commodities would be included in the exempt or 5% tax slab. An exhaustive list of items under different tax rates is expected to be decided and released tomorrow.
• The industry should be able to finalise decisions placing reliance on the Rules which have been confirmed by the Council.

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