GST Council to discuss 5% and 18% two-rate system with 40% sin levy

The Goods and Services Tax Council will meet in New Delhi on September 3 and 4 to consider the central government's proposal to simplify India’s GST structure into two principal rates of 5 percent and 18 percent, with a special 40 percent rate for select sin and ultra luxury goods, officials said. An officers meeting is scheduled for September 2, and council sessions are expected to begin at 11 a.m. on both days as ministers weigh reports from Groups of Ministers on rate rationalisation, the compensation cess and taxation of health and life insurance.

The central proposal, endorsed in principle by the GoM on rate rationalisation, would scrap the current 12 and 28 percent slabs and migrate the bulk of items in those categories into the lower 5 and 18 percent brackets. Officials and industry advisers say this could move many everyday goods and services into the 5 percent merit category while placing most standard items at 18 percent. A small number of items such as high end cars, tobacco and certain sin goods are likely to be placed in a new 40 percent bracket. The plan also includes targeted minimal rates for a few labour intensive items and proposed exemption of individual...