The Centre has proposed a multi-rate structure wherein gold will be taxed at 4% and the rest of the items at a tax rate of 6%, 12%, 18% and 26%. It has also proposed to levy an additional cess over and above 26% on demerit items like tobacco, luxury cars and aerated drinks and use these proceeds to pay compensation to states for the revenue losses arising due to GST, if any.
Jaitley in his post batted for “continuation of existing levies as cess for a period of five years before subsuming them as tax. This would include clean energy cess and cesses on luxury items and tobacco products, which in any case, presently also pay levy higher than 26%. This would ensure no additional burden on the tax payer and yet be able to compensate the losing states.”
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