The Goods and Services Tax Council on Thursday decided a four-tier rate structure of 5%, 12%, 18% and 28%, at the meeting chaired by Union Finance Minister Arun Jaitley, PTI reported. Items of mass consumption will attract the lowest rate, while luxury goods and demerit items such as aerated drinks, paan masala, luxury cars and tobacco products will be taxed at 28%, ANI reported.

The decision was taken on the first day of the two-day meeting called to sort out outstanding issues such as a tax rate and the levy of cesses. “Considering the inflation impact of having one standard rate, there will be two standard rates of 12% and 18%,” Jaitley said. The Union minister said white goods that were taxed at 30%-31% would now be taxed at 28%, but with a rider.

At its last meeting in October, the Centre and states had failed to reach a consensus on the rate bands for the new regime. The states also reportedly failed to come to an agreement on the Centre’s proposal to impose a cess above the GST on luxury items. Revenue Secretary Hasmukh Adhia had said the states were of the opinion that it was not possible to segregate goods and services. Meanwhile, Jaitley had said the final tax slabs would depend on the source of funds that the Centre intended to use to compensate states for revenue losses incurred after the shift to the GST regime.

The GST Bill got President Pranab Mukherjee’s approval on September 8, after being ratified by 16 states. It was passed by the Rajya Sabha on August 3.