Top rate of GST likely to be 28 percent

NEW DELHI (Reuters) - India's federal and state governments are likely to approve four main tax slabs ranging from 5 to 28 percent under a proposed Goods and Services Tax (GST), the finance minister of the state of Jammu & Kashmir said on Thursday.

The long-delayed tax, which would transform Asia's third largest economy into a single market, could boost revenues through better compliance while making life simpler for business that now pay a host of federal and state levies.

The brackets, discussed at a meeting of the GST Council overseeing plans to introduce the national sales tax next spring, are steeper than the rates of 6, 12, 18 and 26 percent earlier proposed by the government.

"There was a broad consensus on four rate slabs," Haseeb Drabu, state finance minister for Jammu & Kashmir told reporters after attending the GST Council's meeting.

Foodgrains are likely to be exempted from the GST, and tobacco products may be taxed at 40 percent, he said.

Thomas Issac, state finance minister of Kerala said the council had yet to decide on the controversial issues of additional levies on luxury items and so-called "dual control" of tax administration by federal and state tax officials.

Finance Minister Arun Jaitley will seek parliamentary approval for bills later this month that would set the rate and scope of the GST. State assemblies must also to approve similar bills for the tax to enter force as planned next April 1.

(Reporting by Nigam Prusty; Writing by Manoj Kumar; Editing by Douglas Busvine and Simon Cameron-Moore)