The council, headed by Mr Jaitley and which comprises the representatives of all states, chose to levy a five per cent GST rate (2.5 per cent by Centre and 2.5 per cent by states) on small hotels, restaurants and dhabas with an annual turnover of up to Rs 50 lakhs.
With regards to tax payment, a state-wise single registration will be maintained for filing returns, paying taxes, and to fulfill other compliance requirements.
The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon previous year for the moment, but is only a provision being built into the model law to take care of contingencies in future, two officials in the know told PTI.
West Bengal finance minister Amit Mitra said the demands of the states for sharing of administrative powers under the IGST act have been met.
The states and the Centre on Saturday decided on a 5% levy on dhabas and small restaurants under the goods and services tax (GST), while moving ahead with two key legislations, Central GST (CGST) and Integrated GST (IGST), with a final decision expected in a fortnight.
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He further said that CGST, IGST and UT-GST law to be taken to Parliament in the second half of Budget session beginning March 9. In its next meeting on March 16, the Council will carry out discussions for approving the State-GST and Union Territory-GST (UT-GST) laws. The effective peak rate will continue to remain at 28 percent.
Successive governments have pushed to implement the GST, which will create a common market and help lower the tax burden, shore up government revenues, temper inflation and boost economic growth by 1-2 percentage points, analysts say.
The revised draft of model GST law, which was made public in November 2016, provides for a maximum rate of tax under the new regime at 14 per cent (14 percent central GST and an equal state GST, taking the total to 28 percent).
Agriculturists will be exempt from registering under the GST regime.
This would make things easier as the Council will not have to approach parliament again in case it wanted to increase peak rate in future. States want the higher limit set at 40% to obviate the need to go to Parliament every time taxes have to be raised on certain goods and services.