GST rates decided on 1,211 items: Milk, cereals exempt, foodgrain to be cheaper

May 19, 2017 07:17 AM

Srinagar: The Centre and states agreed on Thursday to exempt most food items including wheat, rice and milk from the Goods and Services Tax (GST) but kept the levy at 18% for manufactured goods. Other household items such as sugar, tea, coffee and edible oil will attract 5% GST, senior officials said after a meeting of the GST Council in Srinagar.

The council fixed the rates for over 1,200 items under the GST, which the government plans to roll out on July 1. Hailed as the the country's biggest tax reform since Independence, GST will unify Asia's third largest economy into a common market, eliminating a string of central and state levies. "There is no increase in taxes of the items considered today. In fact, for many of them, taxes have come down," finance minister Arun Jaitley told reporters in the capital of Jammu and Kashmir.

The Narendra Modi government is keen to ensure a seamless transition to GST, which is expected to shore up state and federal tax revenues, cool inflation and accelerate economic growth by 1-2 percentage points in the medium term.

Revenue secretary Hasmukh Adhia said 81% of the items will attract tax of 18% or below. Only 19% of items will be taxed at the highest rate of 28%, he said. The tax on coal has been fixed at 5% as against the current 11.69%. The finance minister said out of 1,211 items, rates on all barring six have been decided. The GST Council will discuss on Friday the rates on services and may meet one more time if tax rates for all items are not decided by then, Jaitley said.

Cereals have been exempted from GST as opposed to current 5% levy, while hair oil, soap and toothpaste will attract 18%, Adhia said. After the Parliament passing the crucial GST bills in early April, the Centre and states are brainstorming on tax rates of specific items. A committee headed by Adhia finalised the contentious issues on taxation of specific items with state officials before Thursday's meeting.

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