However, no consensus could be reached on the rate to apply on gold as well as beedi.
The next meeting will be held on June 3. The GST rates for all but six items were finalised at the first day, headed by Union Finance Minister Arun Jaitley and comprising state representatives.
Isaac said that the present tax rate of all goods and services should be made public. The tax rates are divided into 4 tax slabs, namely, 5%, 12%, 18%, and 28%. Since service providers will get tax input credits, he said, the effective tax rate will be lower. States are split over how much should be the levy with those such as Tamil Nadu and Maharashtra backing a lower 1% tax on the yellow metal. Touted to be India's biggest tax reform since independence, GST will subsume all other indirect taxes on supply of Goods and services, right from manufacturer to consumer.
The council has set four different slabs of GST for luxury goods: 5 per cent, 12 per cent, 18 per cent (standard rate) and 28 per cent.
In addition to the above, certain items like motor cars, cigarettes, aerated waters shall also be subject to a (compensation) cess, which shall be chargeable over and above the GST charge per the rate schedule.
According to Mitra, "by introducing GST before the due preparedness of all links in the production chain, a domino effect could be let loose on the economy, undermining all sectors of the economy and particularly adversely affecting the states".
The GST rates on telecom, financial services have been fixed at 18%, while healthcare and education have been exempted from service tax on the second day of the GST Council meet in Srinagar. A significant share (19%) of goods, however, has been tucked under the highest tax slab of 28%: many of these cater to the daily needs of the growing middle class. Most probably the rates of remaining items will be decided in a meeting that will be conducted today.
The SMEs in the sectors have an opportunity to increase their profit margins and production, industry members said.
Considering the massive impact of GST the operators have already initiated the registration process involving migration to the GST regime, the COAI said. The tax is likely to go up once petrol and diesel are brought under the GST net.
"GST rates are likely to be nearly neutral for the commercial vehicles and two-wheelers, and would marginally increase for three-wheelers".
At present, telecom consumers are charged 15 per cent in form of tax and cess over their phone bills.
"The services have been split up into 12 and 18 per cent and some 5 services in 28 per cent category", he said. The basic items- eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour - are exempted.
The 18 per cent tax under GST regime will augment the existing burden of the telecom industry further, he added.
CRISIL Research felt the benefits of GST on business practices and company strategies will only be seen in the medium term. The two-day meeting will take up the exemption of essential services on Friday.
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