Jul. 2 – India may allow lower tax rates for goods taken out of the tax exemption list when the new Goods and Services Tax (GST) is implemented next year.
The tax exemption list currently names 350 goods. Goods taken out of the list will be considered to be the same level as essential goods, giving it a lower tax rate. For example basic food items like curd and butter milk and selected textile products might be given a lower rate although most branded goods will be taxed under the standard rate.
The tax exemption list under the India GST will be the same for all states. “The Center has agreed to most of the demands of the states but it will not agree on different exemptions and different thresholds. The different exemption list would lead to distortions,” a government official said.
The 13th Finance Commission task force suggests the following exemptions be made available under the new GST: public services; defense and police; employer-employee transactions; unprocessed food sold under the public distribution system; education services provided by non-governmental bodies; and health services provided by non-governmental agencies.