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GST Council may do Away With 5% Rate at Next Meet

With most states on board to raise revenue so that they do not have to depend on the Center for compensation, the GST Council at its meeting next month is likely to consider a proposal to do away with the 5 per cent slab by moving some goods of mass consumption to 3 per cent and remaining to 8 per cent categories, sources in the know said. Currently, GST is a four-tier structure of 5, 12, 18, and 28 per cent. Besides, gold and gold jewellery attract 3 per cent tax. In addition, there is an exempt list of items like unbranded and unpacked food items which do not attract the levy. Sources said to augment revenue the Council may decide to prune the list of exempt items by moving some of the non-food items to 3 per cent slab. Sources said that discussions are on to raise the 5 per cent slab to either 7 or 8 or 9 per cent, a final call will be taken by the GST Council which comprises FMs of both the Centre and states. Per calculations, every 1 per cent increase in the 5 per cent slab, which mainly includes packaged food items, would roughly yield an additional revenue of ₹50,000 crore annually. The Council is likely to settle for an 8% GST for most items that now attract 5% levy.

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