In order to minimise price rise after the launch of Goods and Services Tax (GST) regime, the revenue department is going to work out the impact of GST on inflation before the fitment committee starts fixing rates for various goods and services. Besides, the department has said that it will work on an exempted list for both goods and services and will keep GST rates close to the current tax rate for the majority of items which are having heavy weights in the Consumer Price Inflation (CPI) basket.
The GST Council has finalised a multiple-slab rate structure, including the cess, for the new indirect tax. The four slabs have been set at 5, 12, 18 and 28 per cent for different items or services and a cess would be levied on demerit and luxury goods, the proceeds of which will be utilised to compensate the revenue loss incurred by states on roll out of Goods and Services Tax (GST) regime. Moreover, all existing cesses, apart from the environment cess and the national contingency and calamity duty (NCCD), will be abolished under the GST regime.
The department further noted that if the revenue accruing from levy of cess falls short of the amount required to compensate states, then the Centre will borrow funds from the exchequer and added that in order to repay the additional fund which would be borrowed from the exchequer, the cess can be continued for sixth year if the GST Council decides.