Today the GST Council has fixed the tax rate on gold at 3%, and it is lower than the lowest slab of 5% under the new regime, which will be implemented from 1st July, and it is closer to the current tax rate of about 2%. Union Finance Minister Arun Jaitley said, “After extensive debate on gold, between 2% and 5%, there was almost a vertical division. And ultimately a consensus has been reached at 3%”. Notably, the lobby of traders had been demanding to keep the levy on the precious metal at close to a rate of 1%. Market experts also expressed their concerns that a higher tax rate on gold will only add to the already high proportion of cash transactions on the commodity, and hence it will increase gold smuggling.
The Council also decided on rates of yarns, agriculture machinery, apparels and rough diamonds at its 15th meeting, chaired by Arun Jaitley. The council will meet again on June 11, 2017, before the roll out of the new indirect tax regime. Finance Minister Arun Jaitley said that a major concession has been given for footwear, textiles, and the items being used by the common man.
Arun Jaitley said footwear costing above Rs 500 will be taxed at 18 percent, while below this amount will be taxed at 18 percent. Currently, footwear between Rs 500-1,000 attracts 6 % excise duty. As per the discussion in the meeting by the council, the readymade garments will attract a levy of 12 per cent. Solar panels will be taxed at 5 % under GST. Tendu leaves will be taxed at the rate of 18 % and 28 % respectively. Rough diamonds will be taxed at 0.25 percent.
The Council has also discussed the implementation of anti-profiteering clause. The GST Council has decided to clear the pending rules and laws of return and transition provisions
The GST council has proposed 4 tax slabs at 5%, 12%, 18% and 28% under the Goods and Service Tax (GST), while exempting essential or daily consumption items and services, such as fresh chicken, fish, meat, eggs, milk, curd, fresh fruits, vegetables, and bread, and healthcare and education services from tax levy. Other than this, it levied above the 28 percent tax on certain luxury goods and sin goods. The Council kept 81 percent of the items in the first 3 tax brackets, i.e. up to 18 percent. The 12% and 28% tax bracket together account for two-thirds of all other items.
The GST Council seeks to unify the entire country into a single market with only one value-added tax rate on all the services and goods across states at the point of consumption, subsuming up to sixteen different taxes that are imposed currently. Obviously, this is expected to make the movement goods across the state borders smoother and faster. But some experts have raised concerns over the complications that can arise out of a multiple tax slab structure.
