GST: Gold to be taxed at 3%, beedis at 28%

New Delhi: The GST Council on Saturday completed the exercise of bringing all items under a 4-slab tax structure with gold to be taxed at 3 per cent, ending the suspense on the item dear to Indians, even as all states barring West Bengal agreed on the rollout of the new indirect tax regime on July 1.

"Gold, which currently has an excise of 1 per cent and states charge around 1 per cent VAT...keeping these various taxes in mind, and after a lot of debate in the GST Council, we have finally reached a consensus on 3 per cent for gold and gold jewellery," Finance Minister Arun Jaitley, who heads the GST Council, told reporters here after the 15th meeting of the Council.

Besides, rough diamonds have been levied a nominal tax of 0.25 per cent in order "to keep the audit trail" of transactions, he said.

While beedi leaf, or "tendu" will be taxed at 18 per cent, beedis will be levied tax at 28 per cent.

"Beedi and beedi leaf will not attract cess over and above these taxes, but cigarettes will have cess," Jaitley said.

Footwear costing below Rs 500 will be taxed at 5 per cent, while those costing more will attract 18 per cent tax.

Regarding items of use by the common man, the minister said that even manufactured apparel costing less than Rs 1,000 would be taxed at 5 per cent

Revealing that textiles was a major topic of discussion at the meeting as it is a mass consumption item, he said that while cotton and all other natural fibres are in the 5 per cent bracket, "man-made" fibre will attract a levy of 18 per cent.

All yarn will be taxed at 5 per cent, subject to man-made fibres being charged at 18 per cent.

"Fabric of all categories will have 5 per cent tax, while for 'made-up apparel' it will be 12 per cent," Jaitley said.

"Packaged food items sold under registered trade marks, which are sold at a much higher price (than food) would carry a rate of 5 per cent," he added.

The Finance Minister also said that biscuits, both of the cheaper and more expensive varieties, would be taxed at 18 per cent.

The GST Council had convened here for its 15th meeting to finalise the rate fitment of the remaining six items, including gold.

The fitment of 1,211 items was decided at the Council's previous meeting held last month in Srinagar.

Earlier this week, West Bengal Finance Minister Amit Mitra had voiced serious doubts about the preparedness of the industry for GST by July 1.

Jaitley also said that in view of the many representations received on the fitments, the committee of officials would take up these cases.

These, as well as other pending matters, would be discussed at the next meeting of the GST Council that has been scheduled to be held here on June 11, he added.

The GST Network (GSTN) made a detailed presentation at Saturday's meeting on their IT preparedness for implementation from July 1.

"Members questioned the GSTN extensively on their level of preparations and the GSTN expressed confidence it is fully ready for the work assigned to it," Jaitley said.

Speaking to reporters here after the meeting, West Bengal Finance Minister Amit Mitra continued to be doubtful about the GSTN's readiness.

"Entire GST will depend on one IT system of GSTN. The presentation given by them clearly shows that they are not ready and need more time. They have appointed 34 Suvidha providers for the whole country, will that be sufficient," he said.

"We are not opposing GST. We support it. But the July 1 deadline should be extended. There should be more meetings, discussions," he added.

Queried about Mitra's position at the meeting on the July 1 rollout, Jaitley said that "the others did not share that view."