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The Finance Ministry’s Revenue Department is interested in calculating GST impact on inflation before the concern committee starts fixing rates of different goods and services. According to officials, an ‘exempted list of goods and services’ will be drafted and there will not be major changes in various goods and services tax rates as compared to what is prevailing in current indirect taxation regime ,that is, majority of the items, which have high weightage in CPI(Consumer Price Index) will be taxed at the rate close to the current tax rate.
The GST Council has already decided on four tax slab rates ,5% , 12%, 18% and 28% with ‘zero tax rate’ on several goods including food grains.
In addition to this, the Council in its Thursday meeting approved cess that would be levied on demerit and luxury goods and the same would be utilized to compensate the revenue losses suffered by states after the implementation of GST.
While the cess for aerated drinks and luxury cars has been capped at 15% above the peak rate of 28%, the cess on pan masala and tobacco has been decided on 135% and 290% respectively. However, final call on levy of cess on each item will be taken by the GST Council at a later date.
All the existing cesses, apart from the environment cess and the national contingency and calamity duty, will be abolished under GST regime.