Under the new tax, rates will range from 5 to 28 percent, with 12 percent and 18 percent being the standard rates. Most raw food items including milk will be exempted from tax while the panel still has to finalize rates for processed food items.

Some food items like coffee and edible oil will be taxed at a rate of 5 percent, Revenue Secretary Hasmukh Adhia said. Coal will be taxed at 5 percent along with a levy of 400 rupees per ton.

The tax rates for services have been finalised and will be 5, 12, 18 and 28 percent - in line with those applying to goods.

Telecoms and financial services will be taxed at a standard rate of 18 percent while transport services will be taxed at 5 percent, Jaitley said.

"The net effect of Goods and Services Tax will not be inflationary," Jaitley told reporters after a meeting of the GST Council in Srinagar, summer capital of Jammu and Kashmir state.

Also see: No tax on food items, contraceptives; mobile phone levy at 12% under GST

The new tax is likely to be non-inflationary as the government has kept a majority of food items, with a combined weighting of nearly 50 percent in the consumer price index, out of the tax net.

Basic food items like cereals, eggs and meat will attract zero tax while processed food items will be charged between 12 and 28 percent.

The committee though couldn't arrive at a consensus on the rates for gold and on beedis, and will meet again on June 3 in New Delhi to decide this.

Kerala Finance Minister Thomas Isaac told reporters after the meeting that "not in a single case has there been an increase in taxes from before".

"GST regime will usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganised to organised players," said Aditya Narain, Research head at Edelweiss Securities Ltd.

Also see: GST Bill is going to be consumer friendly: Jaitley

The long-awaited Goods and Services Tax (GST) is hailed as India's biggest tax overhaul since independence in 1947. It will replace a slew of federal and state levies, transforming Asia's third largest economy into a single market.

The council also approved most of the draft rules relating to the new tax that would push businesses to upgrade their infrastructure for filing tax returns under the new system.

"Several process related changes can now be undertaken as the passage of the rules has paved the way for the introduction of the most significant tax reform in India," said MS Mani, senior director at Deloitte Haskins & Sells LLP.

Highlights from the GST rate card:

Nil rate (0%):

No tax on items like fish chicken, eggs, milk, fresh meat, curd, butter milk, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom etc.

5%:

Items such as cream, branded paneer, skimmed milk powder, fish fillet, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will attract 5% tax.

12%: Butter, cheese, ghee, frozen meat products, animal fat, sausage, fruit juices, dry fruits in packaged form, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, and cellphones will attract 12% tax.

18%: Most items including pasta, flavoured refined sugar, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors, are under this slab.

28%:

Chewing gum, molasses, , waffles and wafers coated with choclate, chocolate not containing cocoa pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use, and yachts will attract 28% tax.

Arun Jaitley on the new GST rates: