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Arun Jaitley says confident of GST’s 1 July rollout, rates fixed on contentious items

LiveMint logoLiveMint 03-06-2017 Gireesh Chandra Prasad

New Delhi: Federal indirect tax body the Goods and Services Tax (GST) Council on Saturday decided to stick to the 1 July deadline to roll out the indirect tax reform and cleared the tax rates for all the remaining commodities keeping mass use items in the lowest slab or closest to the current tax burden on them, finance minister Arun Jaitley said in New Delhi.

Jaitley, who chairs the Council which has state finance ministers as members, said the decisions were made by consensus after detailed discussions. “We are confident of being able to stick to the target date,” said Jaitley.

Accordingly, gold and jewellery will be taxed at 3%, a compromise between traders’ demand of 1.5% and the 5% demanded by the Kerala government. Kerala is a major consumer of the precious metal. Biscuits of all price range will attract a GST rate of 18%, which is lower than the current tax burden on them.

Jaitley said GST Network, the company that will manage tax returns and invoices, has expressed confidence that it is fully ready for the task.

Packaged food items, where the food item otherwise sold without a package is exempt from tax, will attract a 5% GST rate. Footwear is categorised into two tax slabs. Those priced below Rs500 that currently attract a tax burden of 9.5% will be taxed at 5%. Others will be taxed at 18%.

Bidis will be taxed at 28% and the leaves used in rolling bidis (patta) will be taxed at 18%. Unlike cigarettes, there will be no cess on bidis.

All categories of yarn except manmade ones will be taxed at 5%. Manmade yarn will attract 18%. Fabric of all categories will be taxed at 5%. Apparel priced above Rs1,000 will be taxed at 12% while lower priced ones will be taxed at 5%.

The Council did not consider requests from industry for reduction in tax rates on specific items in Saturday’s meeting. It however, clarified that solar panels will be taxed at 5%, against 18% specified earlier.

The federal body will meet again on 11 June to consider industry requests for concessions and any other pending issue.

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