<div align="justify">The Goods and Services Tax (GST) levy may go up to 40% after the GST Council proposed raising the peak rate in the Bill to 20%, from the current 14%, to obviate the need for approaching Parliament for any change in rates in future.<br /><br />The model GST Bill will replace the clause which states the tax rate “not exceeding 14%, with not exceeding 20%” when it comes up for debate in Parliament during the second phase of Budget session beginning next week.<br /><br />The change in the peak rate will not alter the 4-slab rate structure of 5%, 12%, 18% and 28% agreed upon last year for the moment, but is only a provision being built into the model law to take care of contingencies in future, two officials said.<br /><br />The revised draft of model GST law, which was made public in November 2016, provides for a maximum rate of tax under the new regime at 14% (14% central GST and an equal state GST, taking the total to 28%).<br /><br />“There shall be levied a tax called the central/state goods and services tax (CGST/SGST) on all intra-state supplies of goods and/or services... at such rates as may be notified by the central/state government... but not exceeding 14% on the recommendation of the Council and collected in such manner as may be prescribed,” the draft law states.<br /><br />Upper band <br /><br />Officials said this will now be changed to say the rate will not exceed 20 %.<br /><br />The GST Council, headed by Finance Minister Arun Jaitley and comprising representatives of all states, has agreed to keep the upper band of the rate in the law at 20%.<br /><br />“For the moment, we will not tinker with the rate structure of 5%, 12%, 18% and 28%. The GST Council has decided to keep the upper cap higher at 20% so that in future in case of need to hike tax rate, there is no need to approach the Parliament for a nod and the GST Council can raise it,” the officials said.<br /><br />This means the central GST and state GST can be up to 20% each, leaving the scope for a maximum levy at 40%.<br /><br />“The 4-tier rate structure that has been decided will hold for now. By keeping the upper cap at 20%, we are just keeping an enabling provision which the Council can exercise at a later date after deliberation,” the officials added.<br /></div>
<div align="justify">The Goods and Services Tax (GST) levy may go up to 40% after the GST Council proposed raising the peak rate in the Bill to 20%, from the current 14%, to obviate the need for approaching Parliament for any change in rates in future.<br /><br />The model GST Bill will replace the clause which states the tax rate “not exceeding 14%, with not exceeding 20%” when it comes up for debate in Parliament during the second phase of Budget session beginning next week.<br /><br />The change in the peak rate will not alter the 4-slab rate structure of 5%, 12%, 18% and 28% agreed upon last year for the moment, but is only a provision being built into the model law to take care of contingencies in future, two officials said.<br /><br />The revised draft of model GST law, which was made public in November 2016, provides for a maximum rate of tax under the new regime at 14% (14% central GST and an equal state GST, taking the total to 28%).<br /><br />“There shall be levied a tax called the central/state goods and services tax (CGST/SGST) on all intra-state supplies of goods and/or services... at such rates as may be notified by the central/state government... but not exceeding 14% on the recommendation of the Council and collected in such manner as may be prescribed,” the draft law states.<br /><br />Upper band <br /><br />Officials said this will now be changed to say the rate will not exceed 20 %.<br /><br />The GST Council, headed by Finance Minister Arun Jaitley and comprising representatives of all states, has agreed to keep the upper band of the rate in the law at 20%.<br /><br />“For the moment, we will not tinker with the rate structure of 5%, 12%, 18% and 28%. The GST Council has decided to keep the upper cap higher at 20% so that in future in case of need to hike tax rate, there is no need to approach the Parliament for a nod and the GST Council can raise it,” the officials said.<br /><br />This means the central GST and state GST can be up to 20% each, leaving the scope for a maximum levy at 40%.<br /><br />“The 4-tier rate structure that has been decided will hold for now. By keeping the upper cap at 20%, we are just keeping an enabling provision which the Council can exercise at a later date after deliberation,” the officials added.<br /></div>
