GST: Decision on tax rates postponed to next month

Krishnanand Tripathi
Union Finance Minister Arun Jaitley addressing the media  with Minister of State for Finance Santosh Gangwar after the 3rd meeting of GST Council in New Delhi on Wednesday.

Union Finance Minister Arun Jaitley addressing the media with Minister of State for Finance Santosh Gangwar after the 3rd meeting of GST Council in New Delhi on Wednesday.

The crucial meeting of union finance minister and state finance ministers in national capital Delhi failed to arrive at a consensus on tax slabs for a common goods and services tax to be implemented across the country from April 01 next year. The decision has been postponed to the next meeting when the council will meet again on the 3rd and 4th November.

State finance ministers have gathered in national capital for a three day meeting to decide the compensation formula and tax rates before the parliament convenes next month to enact two laws for implementing GST.

However, differences over levy of cess on ultra luxury products over and above the highest band proposed under the GST led the council to postpone the decision to the next meeting.

As per sources, some states, including Kerala, Tamil Nadu and Uttar Pradesh opposed the imposition of cess on the ground that it was against the principle of GST that aimed at subsuming all the indirect taxes on production and supply of goods and services across the country.

An informal understanding was reached at the end of the two-day meeting of the GST Council on a four-slab tax structure of 6, 12, 18 and 26 per cent.

The lower tariff will be for essential items and the highest bracket for luxury and sin goods like tobacco, cigarettes and alcohol, but a decision was put off to the next meeting.

Finance Minister Arun Jaitley said the GST Council, that includes representatives of all states, will meet again on November 3-4 to decide on the tax rates.

The GST Council, which was originally to meet for three days, “converged towards a consensus on source of funding for state compensation,” Jaitley said.

On tax structure, he said, “We cannot under-tax or over-tax to keep rate slabs minimum.”

The attempt, he said, was to fit zero rated items while levying a 6 per cent tax on items that are currently charged 3-9 per cent tax.

“We will finalise the tax structure at the next meeting,” he said, indicating there were two standard rates of 12 per cent and 18 per cent under discussion.

Once the GST rates are decided, the GST Council will meet again on November 9-10 to finalise the draft legislations, he said.