Diwali gift: Two-tier GST regime by October

AN OFFICIAL SAID tax incidence will be the same on sin goods like tobacco, gutka and cigarettes as before (more than 40%), but did not elaborate how it will be done.

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The Centre suggested that tools and machineries used by farmers should attract a lower tax rate. The GST on health and life insurance may attract 5% tax instead of 18% now, with input tax credit. Tax rates may also be lowered for the renewable energy sector, handicrafts and pharmaceuticals and medical devices.

As much as 70% of the GST revenue is currently mobilised from the 18% slab, which covers all fast-moving consumer goods, most services, consumer durables, industrial intermediates, building materials except cement, furniture etc. The 40% slab will be restricted to tobacco products, pan masala etc., while a clutch of items in that bracket, including cement, air conditioners, and even some small cars, may now be shifted to the 18% slab. It is also possible that online gaming could attract 40% tax.