The Goods and Services Tax (GST) Council has decided on a four-tier rate structure of 5%, 12%, 18% and 28%.According to Finance Minister Arun Jaitley, the two items that were discussed by the GST Council were rate structure and compensation formula, and cross empowerment. “Broadly under the new rate structure, the aam aadmi items will be taxed at a rate of 5%,” Jaitley said.
GST has long been touted as one of independent India’s most crucial indirect tax reforms. The long-delayed tax is expected to boost revenues through better compliance.
The simpler tax structure would also imply that it would be easier to do business in India. The tax brackets that have been decided are steeper than the rates of 6, 12, 18 and 26 per cent earlier proposed by the government.
