More reports on: Government policies

GST Council finalises tax rates for services

news
19 May 2017

Finance minister Arun JaitleyThe Goods and Services Tax Council, the apex body to fix tax rates under the new indirect tax regime, today finalised the tax rates for services under the GST, which is scheduled to be rolled out from 1 July.

The GST Council finalised four tax rates of 5, 12, 18 and 28 per cent similar to the tax slabs for goods - for the various services, including telecom, insurance, hotels and restaurants.

There will, however, be no tax on services like healthcare and education, which will be exempt from GST.

Addressing the media after the 2-day GST Council meeting in Srinagar, finance minister Arun Jaitley said, GST will be levied at 5 per cent on cab aggregators like Ola and Uber.

Telecom and financial services will attract GST of 18 per cent while race clubs, betting and cinema halls will be taxed 28 per cent.

"Restaurants with turnover of Rs50 lakh or below will face 5 per cent tax under GST while non-AC restaurant will face 12 per cent tax," said Jaitley.

AC restaurants and those with liquor licence will be charged 18 per cent GST and 5-star hotels will be levied 28 per cent, he said, adding that hotels with tariff of Rs1,000-2,500 will have to pay 12 per cent tax.

Travelling on metro, local train and religious travel, including Haj yatra will all continue to be exempt from GST, revenue secretary Hashmukh Adhia said. Economy class air travel will attract 5 per cent GST while business class will be charged 12 per cent, he said.

The tax rate on gold has not been finalised yet. The GST Council will meet again on 3 June.

The GST rates for all but six items were finalised at the first day of the two-day meeting of the GST Council.

Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from the GST. Currently, some states levy Value Added Tax (VAT) on them.

"We have finalised tax rates for a majority of items as well as the exempt list (at today's meeting)," Jaitley told reporters.

Out of the 1,211 items, the GST rate for all but six was decided on the first day, he said.

"Rates have been finalised for the rest," he said, adding GST for packaged food items is to be finalised later.

"(With) the standard rate items of 12.5 percent and 15 percent, plus the cascading effect of local taxes, the tax rate was going up to 30-31 percent. These 30-31 per cent taxes... Have all been brought down to 28 per cent.

"Of these, some are items to be used by common man soap, oil - that has been brought down to 18 per cent. So there will be a substantial reduction as far as those items are concerned. We have kept one criterion in mind that the overall impact is not inflation, in fact it brings down the costs," Jaitley added.

Revenue secretary Hasmukh Adhia said 7 per cent of the items fall under the exempt list while 14 per cent have been brought under the lowest tax bracket of 5 per cent. Another 17 per cent items are in 12 per cent tax bracket, 43 per cent in 18 per cent tax slab and only 19 per cent of goods fall in the top tax bracket of 28 per cent.





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