NEW DELHI: The Centre and states are expected to keep the exemption list short — about 100 — under the proposed goods and services tax regime, even as the North Block is flooded with requests from industry associations to keep their products out of tax net or in the lowest slab.The Centre currently exempts 299 items while states keep 99 out of the tax net. “Some items will remain exempted,” said a top government official.Goods of common use and consumed largely by the masses will be spared in the final list. Salt, primary produce, fruits and vegetables, flour, salt, milk, eggs, tea, coffee and prasad sold at temples could figure on the exemption list.“It’s near finalisation, ultimately, it will be a political call,” said a government official.Services above certain threshold, exempted under differential taxation, may be brought into the tax net to broaden the base. For instance, budget hotels with tariff below Rs 1,000 do not face service tax while others do.Similar differentiation exists in luxury tax as well. Essential services such as healthcare and education are expected to be kept out. The GST Council will take a final call on Thursday or Friday.Finance minister Arun Jaitley has been in talks with his state counterparts for deciding on rates. The idea is to broaden the tax base and not burden the new tax with exemptions. Exemption also means that these items will not be eligible for input tax credit and thus may ultimately not benefit the target group.“The decision to grant exemptions to certain sectors and below a threshold — especially in case of services — should be based on whether exemptions really benefit the target group, given that input GST would be a cost,” said Bipin Sapra, partner, EY.Exemptions in an ideal GST should be few and the sectors who deserve benefit should be zero rated, he added. India has adopted a four-tier tax structure of 5%, 12%, 18% and 28%. The rate applicable on most products will be 18%. The highest rate has been pegged in the GST law at 40%. The government proposes to roll out the new tax regime, which seeks to replace multiple state and central taxes with a single levy, on July 1.The proposed GST Council meeting will also take up the final set of rules.A minimal exemption list makes sense. The reason is simple. Exemptions break the GST chain, increase the chances of evasion and lead to systemic inefficiencies, defeating the goal of GST. Moreover, industry’s demand for a lower rate can be met only when all indirect taxes get subsumed in GST, and exemptions are minimum.