New Delhi: The crucial 14th Goods and Services Tax (GST) Council meeting to finalise tax slabs on services and commodities in the country started in Srinagar on Thursday.
The meeting which started at 10.30 a.m. will continue till 6.30 p.m.
Chaired by Union Finance Minister Arun Jaitley, this is the first time that such an important national policy-making meet is being held in Jammu and Kashmir.
The two-day meeting will be attended by around 150 dignitaries, including finance ministers and finance secretaries of all the states.
The meeting is aimed to take a final call on the new taxation regime and finalise the rates of different commodities and services.
The Council over the next two days will fit most of goods and services in either 5, 12, 18 or 28 percent tax bracket.
The rates thus fixed will be charged from July 1, the scheduled date for rollout of Goods and Services Tax (GST) -- India's biggest tax overhaul since independence.
The GST will be a national sales tax that will be levied on consumption of goods or use of services. It will replace 16 current levies -- seven central taxes like excise duty and service tax and nine state taxes like VAT and entertainment tax -- thereby creating India as one market with one tax rate.
Jaitley had earlier this month expressed confidence of the GST Council arriving at tax rates in the May 18-19 meeting.
The formal GST Council meeting will be held at the Sher-e-Kashmir International Convention Centre while the decisions taken at the meeting will be spelled out by Jaitley at a press conference on Friday.
Arun Jaitley, who arrived Srinagar on Wednesday, reviewed the overall security situation in the Kashmir Valley and asked the Army to maintain vigil along the LoC and also ensure safety of "innocent people", an official statement said.
The GST Council in its previous meetings had decided on a four-tier tax structure of 5, 12,18 and 28 per cent. Besides, for demerit and luxury goods, a cess will be levied on top of the peak rate. The cess will be used to compensate the states for revenue loss arising out of the GST implementation in first five years.
The fitment committee comprising central and state officials has worked out fitment of these taxes on various goods and services and the report will be placed before the GST Council at its May 18-19 meeting.
Tax rate which is closest to the present incidence of tax on a good or service will be chosen with a view to keeping the shift from the present regime of excise duty plus VAT or service tax to GST regime neutral for consumers.
The tax rates will be decided in a fashion to keep their impact on inflation as well as revenues to the government near neutral.
Officials said that basic services which are at present exempt from service tax would be kept out of the GST as the Centre does not want to give any shock to people in the first year of GST rollout.
Currently, there are 17 items in the negative list of services on which service tax is not levied. On top of that there are over 60 services, like religious pilgrimage, healthcare, education, skill development, journalistic activities, which are exempt from service tax.
As per estimates, the GST is expected to shore up government revenue and spur economic growth by 1-2 percentage points.
With PTI Inputs