GST Slabs: These exempted items will now attract 3% GST, a new 8% slab may be replaced by 5% Presently, a four-tier system is in force under GST, wherein the tax is levied at the rate of 5%, 12%, 18%, and 28% respectively. gold and gold jewelry attracts 3% tax

GST Rate: It has now become necessary to increase the revenue of the states so that they are not dependent on the Center for compensation. Sources said that in this sequence, the tax slab of 5 percent can be abolished in the meeting of the GST Council to be held next month. Along with this, high consumption items can be put in the slab of 3 percent and the rest in the slab of 8 percent.

Presently, a four-tier system is in force under GST, wherein the tax is levied at the rate of 5%, 12%, 18%, and 28% respectively. gold and gold jewelry attract a 3% tax. Essential commodities are either exempted from tax or levied the lowest tax. Sources said that to increase revenue, the council may reduce the list of exempted items and put non-food items in the slab of 3 percent. Sources said discussions are on to increase the tax slab of 5 percent to 7 or 8 or 9 percent. The final decision on this will be taken by the GST Council, which includes finance ministers of both the Center and the states.

The agency said that increasing the tax slab from 5% to 8% could generate additional annual revenue of Rs 1.50 lakh crore annually. According to one calculation, an increase of one percent can generate revenue of Rs 50,000 crore annually. This mainly includes packaged foods. While several other options are under consideration, the council is likely to agree to a GST slab of 8 percent for most items, which is currently 5 percent. Under GST, essential items are either estimated to be exempt or can be taxed at the lowest. On the other hand, luxury and demerit items can attract the highest tax. In addition to the 28 percent slab on luxury and sin goods, cess is also levied. This cess is used to compensate for the revenue loss to the states after the implementation of GST.

With the GST compensation regime coming to an end in June, states need to be self-reliant, so that they do not depend on the Center to compensate for the gap in GST collections. The council had last year constituted a panel of state ministers under the chairmanship of karnataka Chief minister Basavaraj Bommai to suggest ways to increase revenue. A meeting of this Group of Ministers (GOM) is likely to be held next month to finalize the recommendations.