The proposed goods and services tax would have four rates for different classes of goods and services, and states would be given flexibility in levying extra taxes within a small band in case of items that attract the standard rate. According to sources, there would be lower rate of GST, called merit rate, applicable on certain necessary items and goods of basic importance, a standard rate applicable on most of the items, a nil rate on certain goods and services and a special rate for precious metals.
Under the model GST under consideration for implementation, credit for central and state taxes paid on inputs can be utilised only for paying the respective taxes on the output. Cross-utilisation of central and state taxes is, however, allowed for paying any tax on inter-state supply, the IGST, sources said.

Source - http://www.financialexpress.com