A four-tier GST tax structure of 5%, 12%, 18% and 28%, with lower rates for essential items and the highest for luxury and de-merits goods that would also attract an additional cess, was decided by the all- powerful GST Council.

• With a view to keeping inflation under check, essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate.
• The lowest rate of 5% would be for common use items while there would be two standard rates of 12% and 18% under the Goods and Services Tax (GST) regime targetted to be rolled out from April 1, 2017.
• Announcing the decisions arrived at the first day of the two-day GST Council meeting, finance minister Arun Jaitley said highest tax slab will be applicable to items which are currently taxed at 30-31% (excise duty plus VAT).
• Luxury cars, tobacco and aerated drinks would also be levied with an additional cess on top of the highest tax rate.
• The collection from this cess as well as that of the clean energy cess would create a revenue pool which would be used for compensating states for any loss of revenue during the first five years of implementation of GST.
• Jaitley said about Rs 50,000 crore would be needed to compensate states for loss of revenue from rollout of GST, which is to subsume a host of central and state taxes like excise duty, service tax and VAT, in the first year.
• The four-tier tax structure agreed to has slight modification to the 6%, 12%, 18% and 26% slab that were under discussion at the GST Council last month.