Day one of third meeting of GST council was quite productive. Matters of prime importance were discussed and the consensus was made on some of them.
- Four rate tax structure: GST council has agreed to a four rate tax structure wherein 6% will be the least rate and 26 percent will be the highest rate.
- There will be 6%,12%, 18%, and 26% tax rates with a cess on luxury and demerit goods like tobacco.
- Ultra-luxury items and demerit goods will be under the highest slab of tax. Goods like tobacco, Luxury cars, aerated beverages can be bought under the preview of ultra-luxury and demerit goods.
- Food items and fifty percent of items of common use will be exempt from under GST to keep the inflation in control.
- On compensation to states, 2015-16 will be taken as the base year for calculating revenue assuming a secular or long-term growth rate of 14 percent
- The GST Council has also finalized area-based exemptions and how 11 states—the eight north-eastern states and the three hilly states, will be treated under the new tax regime.
- The tax exemptions given by these states as incentives to the industry will be counted in the definition of revenue for calculation of revenue loss.
- GST council agreed on the manner of compensation to the states. Council decided that states will be compensated for any loss in revenue for five years starting from 1st April 2017.
- Kerala finance minister Thomas Issac said he expected a higher rate for the highest slab.
- A crucial decision on the GST rate will be taken in days 2 and 3 of the council meeting.