States may endorse dual tax at GST Council meet

The Goods and Services Tax Council meeting on Saturday could see a majority of states endorsing dual tax rates for specific consumer goods such as bags, watches, clothes, sunglasses and cosmetic products — based on their prices, with a higher rate for premium products — people familiar with the matter said.

- Rajeev Jayaswal

NEW DELHI: It is not justified that the rich pay the same rate as a commoner, while consuming high-end products, four of the people added.

To be sure, the move also comes amidst a pressing need being felt by the Centre and the states to raise revenues to meet their increasing spends on welfare. From Karnataka to Telangana and Madhya Pradesh to Maharashtra, states governed by political parties of varying hues have huge spending plans for welfare schemes, some of which were responsible for their victories in recent elections. While a consensus on this matter is expected at the Council, the members may also agree with a Group of Ministers (GoM) on two GST rates for both life and health insurance premia, and also exempting senior citizens fully from them — 5% for people with a modest cover (Rs 5 lakh is being spoken of as the ceiling).