India finalises four rates for new sales tax

India moved a step closer on Thursday towards rolling out a Goods and Services Tax (GST) next April after a council of federal and state finance ministry officials approved four main rate bands under the new sales tax. 

 

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The long-delayed tax, which would transform Asia's third largest economy into a single market, could boost revenues through better compliance while making life simpler for business that now pay a host of federal and state levies. A signature reform of Prime Minister Narendra Modi, it aims to harmonise a slew of federal and state levies. 

 

The tax rates would range from 5 to 28 percent, with 12 percent and 18 percent as standard rates, - steeper than the rates of 6, 12, 18 and 26 percent earlier proposed by the government. 

 

Describing the tax as of a "progressive character", Finance Minister Arun Jaitley said half of the items in the consumer price index would not be taxed at all to protect the poor. The tax rate for precious metals like gold has yet to be determined.