Finance Minister Arun Jaitley today announced the tax exemption limit under the Goods and Services Tax (GST) will be around Rs. 20 lakh along with four additional drafts that will be prepared later on.
Indicating the matter to be very complex, Jaitley said the GST council does not want to rush through.
"We have completed a substantial part of discussion today after various proposals," he added while briefing the media over the convergence of GST Tax rates.
The GST, due to be rolled out from April 1, 2017, is set up to oversee the tax, agreed on a more steeply progressive structure for goods than earlier foreseen with rates of 5, 12, 18 and 28 percent respectively.
"Further, we will have informal meet of ministers on November 20th after which an informal meet will be conducted on November 24th and 25th," he announced.
He further said the drafts will be provided to all states, which will be given time to review the same.
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"Essentials like grains that make up half the consumer price index would not be taxed at all. Access would be added to the top 28 percent GST rate over luxury cars and harmful products like tobacco and fizzy drinks," said Jaitley.
"Once the GST kicks in, excise becomes creditable. That should ideally bring the prices down. But for that the manufacturer should be ready to pass on the benefit," he said proposing slabs of six to 26 percent.
"It is likely that all services will be taxed at standard rate of 18 percent. Cascading of VAT, CST, entry tax, octroi and additional customs duty will not exist in GST regime," he added.
Most of the services are likely to be costlier due to increase in tax rate. However, the impact may not be as high as three times if service providers pass on savings due to higher tax credits.
The minister also mentioned that highest tax slab rate will be applicable to items currently taxed at 30 percent to 31 percent (excise duty plus VAT) will be taxed at a demerit rate of 28 percent.