Prices of 300 commodities will be regularly reviewed by the government once Goods and Services Tax (GST) is implemented. A senior official in finance ministry said that the decision was taken by the government to ensure that GST does not lead to inflation, reports Indian Express. Talking about the impact on inflation, the official said that the tax rates on goods and services will be decided in such a way that there is no inflation and these are revenue neutral. The official also said that exact calculation will be done to see that there is no inflation. The GST council had decided on four tax slab rates: 5 per cent 12 per cent 18 per cent and 28 per cent. The council had also decided to have a ”xero tax rate” on several commodities.
The GST council had met on Thursday to discuss – UTGST (Union Territory GST) and sGST (state GST) so that the new indirect tax can be rolled by July 1. The council had cleared revised drafts of the laws related to GST. The senior official revealed that the GST rates on hotels with large turn over will be 18% hotels where as hotels with a turnover of up to Rs 50 lakh will be taxed at 5 %.
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The official further said that the Centre will make up for the loss incurred due to GST via borrowing and as the compensation would only be paid for 5 years, the borrowings can be repaid from the collections of cess from the 6th year after which Centre will not share the cess with the states. The next GST Council meet is scheduled on the 31st of March. The Council will frame the rules and would discuss tax fitment of various goods and services.
In the meeting held on Thursday, the Council also decided to impose cess on luxury and other goods with a 15% cap. According to Indian Express sources the maximum cess on pan masala has been capped at 135%. For tobacco it is capped at 290%. The environment cess is capped at Rs 400 per tonne.