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The new GST or Goods and Services Tax will range from 5 to 28 per cent in a four-bracket structure, agreed upon today by the GST Council
The four GST slabs have been set at 5%, 12%, 18% and 28% for different items or services.
The brackets are steeper than the rates of 6, 12, 18 and 26% earlier proposed by the government.
The peak rate of 28% will apply to luxury goods. GST for tobacco products will be fixed at the level of cess that these products attract now.
The Finance Minister pointed out that the average is lower than the 18% demanded by the opposition.
Service Tax will go up from 15% to 18 %.
The tax rate agreed upon today must be now be approved by parliament, which meets from November 19 for the winter session.
Parliament has to pass two bills related to GST in the winter session to be on track to roll out of the new indirect tax regime from April 1,2017.
Fitment or categorization of items for each slab will be done by officials and will then be approved by the GST council, Mr Jaitley said.
GST does away with indirect levies charged when goods cross state lines and unifies India into a single market.
“Zero-tax rate to apply to 50 per cent of items in Consumer Price Index basket, including foodgrains used by common man,” says Finance Minister Arun Jaitley.