GST Panel Backs Centre’s Proposal for Two-Slab Structure of 5% and 18%

GST GoM approves Centre’s proposal to replace 4-tier system with 5% and 18% slabs; luxury goods to face 40% tax.

New Delhi: The GoM of state ministers on GST rate rationalisation on Thursday accepted the Centre’s proposal to move to a two-slab structure of 5 and 18 per cent.

Bihar Deputy Chief Minister and convenor of rate rationalisation GoM Samrat Choudhary said the six-member state ministerial panel has also accepted the proposal of removing the 12 and 28 per cent slabs.

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“Both the proposals of the Centre have been accepted by the GoM on rate rationalisation,” Choudhary told reporters after the meeting of the panel.

Uttar Pradesh Finance Minister Suresh Kumar Khanna said the Centre’s proposal also includes levying 40 per cent tax on ultra luxury and sin goods.

West Bengal Finance Minister Chandrima Bhattacharya said her state has proposed a levy on top of the 40 per cent GST rate so that the current tax incidence on ultra luxury goods, like cars, and sin goods, is maintained.

Bhattacharya said the Centre’s proposal did not mention the revenue loss that would accrue to the Centre and states after the implementation of the new GST slabs.

At present, Goods and Services Tax is a 4-tier structure of 5, 12, 18, and 28 per cent. While food items are either taxed at 0 or 5 per cent, luxury and sin goods are taxed at 28 per cent.

On top of the 28 per cent slab, cess at varied rates is levied on demerit and luxury goods, like cars.