The Centre and States are busy finalizing the list of items to be included in the exemption list of GST. Though the North block is overflowing with request from multiple industry association to keep their product out of the tax net or in the lowest slab, the government is trying to keep the exemption list short to around 100 items at the most. The Centre currently has 299 items exempted and the states have 99 items out of the tax net. The GST Council will take the final call on May 18-19.
Goods used in bulk and common household goods such as salt, primary produce, fruits, vegetables, flour, milk, eggs, tea, coffee, prasad sold at temple could be spared in the final list. Even essential services like health care and education are expected to be kept out.
Certain threshold exemptions may be brought under the tax net to broaden the base regarding the service taxes. Similar will be the case with luxury taxes.
The main motive of the implementation of GST is to broaden the tax base. Therefore, adding too many items in the exemption list will ultimately not be beneficial for he target group. As exemption also means that these items will not be eligible for input tax credit.
A four tier tax structure of 5%, 12%, 18% and 28% has been adopted by India. 18% rate will be applicable on most of the products and 40% is the highest rate decided by GST law.
With the implementation of new tax regime, on July 1, multiple Centre and State taxes will be replaced by single tax i.e. GST.