But for large cars and SUVs, it has been lowered, as now, the tax incidence is close to 50 per cent on large cars and SUVs. Economy class air travel will attract 5 per cent GST while business class will be charged 12 per cent, he said. If that goes, then overall hybrid cars will attract 43 per cent tax, as they have been allotted 15 per cent cess.
Jaitley said the Jammu Kashmir could bring its own bill as there had been a precedence in the past too when bills had been integrated with Central laws.
It will replace 16 current levies - seven central taxes like excise duty and service tax and nine state taxes like VAT and entertainment tax - thereby creating India as one market with one tax rate.
The council, comprising federal and state finance ministers, fixed rates on Thursday for more than 1,200 items under the Goods and Services Tax, amid demands by some states to keep essential items under the lower tax category. Automobiles will attract 28% GST, with luxury vehicles facing an additional cess of 15%.
The all-powerful GST Council on day two of its fourteenth meet today finalised tax rates for services under the Goods and Service Tax (GST) regime, scheduled to kick-in from July 1.
Staples like pulses and rice, milk, cereals and other foodgrain will get cheaper as these have been added to the exempt list, meaning there will be no GST on these commodities.
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For SUVs and cars fitted with 1500cc and larger engines, the current incidence of taxation is 41.5 per cent to 44.5 per cent - 27-30 per cent of central excise and the rest state Value-Added Tax.
The GST Council in its previous meetings had decided on a four-tier tax structure of 5, 12,18 and 28 per cent. The GST council on Day 1 of the meet ruled that 55 items will invite cess.
Similarly, the burden on those buying refrigerators or washing machines will come down from around 31-32% to 28%, officers said.
FMCG stocks stepped into the limelight on Friday, surging up to 7 per cent, as common use products such as hair oil, soaps and toothpaste will cost less from July 1 when GST is due to set in.
According to the tax slabs approved by the council, small restaurants would be taxed at just 5 per cent. Stating that GST will unify at least 17 central and state taxes together, Behera said products manufactured in the states as well as in the country could compete with products in the global market.
It seems that 81 percent of the items are under 18 percent GST while only the luxury items are at a high tax of 28 percent.
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Services related to gambling, race club betting and cinema halls will also be taxed at 28 percent.
Coal will be taxed at 5 per cent, far lower than its effective tax rate of over 11 per cent, officials said.
It will be interesting to see if there will be an exempted list under the services category. But what is to be done with packaged and branded food has to be separately decided. We need to ensure that a robust administrative stracture and information technoloy based platform is put in place. There is no increase.
Net effect of GST will not be inflationary, he said, adding that healthcare and education services will continue to be exempted from tax under GST.
The meeting will last for two days during which the participants will decide on tax bands for various commodities under the country's first major indirect tax reform. "We are banking on GST checking evasion and buoyancy in collection", Jaitley said.
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