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India's GST Council, formed of representatives from both the central Government and the states, has agreed that goods and services tax should be introduced with four rates.
The two main rates – 12 percent and 18 percent – would be levied on most goods and services. A 5 percent rate would apply to common, non-essential items, and a 28 percent rate would apply to "luxury goods" and tobacco products. A zero rate would be levied on consumer essentials.
Services will generally be subject to an 18 percent rate.
The Confederation of Indian Industry said that four rates is the absolute limit suggested by the Government. It recommended that over time the Government should commit to applying just one or two rates.
It said it is also important that "the bulk of goods and services should fall within the standard rate of 18 percent and only as an exception to go to the higher rate of 28 percent and a lower rate for essential goods such as unprocessed food items, etc."
Lawmakers have yet to decide on the proposed framework.
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