The Goods and Services Tax council plans to hike the peak tax to 20% from the existing 14%, unidentified officials told PTI on Thursday. The proposal is reportedly aimed at avoiding making petitions in Parliament for future changes. The news agency quoted two officials, who said the change in peak rate will not impact the four slab rates of 5%, 12%, 18% and 28% (14% central GST and 14% state GST).

“There shall be levied a tax called the central/state goods and services tax on all intra-state supplies of goods and/or services...at such rates as may be notified by the central/state government...but not exceeding 14% on the recommendation of the council and collected in such manner as may be prescribed,” the draft law states. The revised draft of model GST law was made public in November 2016.

A central, state and Union Territory version of the model GST law will soon be ratified. Officials will categorise goods and services under various tax brackets that will then be subject to the council’s approval. The council will also determine which goods and services will have a cess in addition to the peak rate. This will help create a corpus to compensate any loss incurred by states during the implementation of the new tax regime. ...

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