GST Council Finalises Rates For Services, Education, Healthcare To Be Exempted
The all-powerful GST Council today finalised tax rates for services under the Goods and Services Tax (GST) regime, scheduled to kick-in from July 1.
The government has decided to not include healthcare and education from the new tax rules which will replace the central and state levies.
At the two-day council meeting on GST in Jammu and Kashmir, Finance Minister Arun Jaitley reportedly said that services will have the same four slab tax structure as do goods. According to the report, he also said that the new structure will not have an inflationary impact on the economy.
So what does become more expensive when the new rules kick in?
According to a Bloomberg report, FMCG products are set to become the biggest winners in lieu of the new laws with items like milk, fruits and vegetables, grain and cereals exempted and sugar, tea, coffee and edible oil to be taxed the lowest at 5 percent.
The report says that the automobile sector will be marginally affected with different vehicles attracting different taxation. The peak rate fixed for the sector is 28 percent and analysts tell the media house that the consumer may reap rewards due to the changes.
Consumer appliances will attract a higher tax than the one that exists, says the report, which adds that companies like Whirlpool, Voltas and Havells could be affected. A lessening of the tax on coal and metal ore to five percent will benefit producers like Tata, Vedanta and JSW Steel. For renewable energy, the report adds that there will be a tax of five percent on solar panels and wind turbines which will keep a check on costs for projects by Suzlon and Inox Wind.
The GST Council finalised four tax rates of 5, 12, 18 and 28 per cent to apply on services including telecom, insurance, hotels and restaurants under the biggest tax reform since the Independence.
The rates are in line with those finalised for goods. With this, rates of all items except a handful including gold, have been decided ahead of the roll out of the Goods and Services Tax (GST) regime from July 1.
Briefing reporters here after the two-day meeting of the Council, Finance Minister Arun Jaitey said telecom and financial services will be taxed at a standard rate of 18 per cent.
Transport services will be taxed at 5 per cent. This rate will apply to cab aggregators like Ola and Uber as well as those who currently pay 6 per cent tax.
Non-AC train travel will be exempt and the 5 per cent will be levied on AC travel tickets.
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 cent, he said.
Jaitley said non-AC restaurants will charge 12 per cent GST on food bill. Tax rate for AC restaurants and those with liquor licence will be 18 per cent, while 5-star hotels will charge 28 per cent GST.
Restaurants with Rs 50 lakh or below turnover will go under the 5 per cent composition, he said.
Work contracts like white washing will be liable for a 12 per cent GST.
Entertainment tax will be merged with service tax under GST and a composite 28 per cent levy charged on cinema services as well as gambling or betting at race course.
While the rate proposed for cinema halls is lower than 40 to 55 per cent as per current incidence, it may not result in a reduction in tariffs on cinema tickets as states continue to hold right to levy local charges on them.
Hotels and lodges charging per day tariff of Rs 1,000 will be exempt from GST. Rate for hotels with tariff of Rs 1,000 to 2,000 per day would be 12 per cent while those with tariff of Rs 2,500 to Rs 5,000 would be 18 per cent.
GST for hotels with tariff above Rs 5,000 will be 28 per cent.
Jaitley said tax on gold and precious metals will be taken up at the next meeting of the Council on June 3.
GST on services was the main item discussed at the GST meet today, he said, adding that most services tax exemptions will be grandfathered and they will continue.
Net effect of GST will not be inflationary, he said, adding that healthcare and education services will continue to be exempted from tax under GST.
E-commerce players like Flipkart, Snapdeal will have to deduct 1 per cent TCS (tax collected at source) while making payments to suppliers, Adhia said.
There will be no tax on lottery.
Jaitley said July 1 will be the rollout date for GST. "We are in state of readiness."
With PTI Inputs
- Centre Applauds Army's Attack On Pakistan Posts
- ISIS Claims Responsibility For Manchester Blast That Killed 22
- James Bond Actor Roger Moore Dies At 89
- Wonderful, Precise And Very Cool: How Do Our Money Up-Chucking Machines Work?
- "I'm Only Passing Through" 10 Leonard Cohen Songs That You Must Listen To
- Blackout For NDTV Stirs The Media
- Daily Curator: The Dominion Of Misunderstood Men Over Headlines
- Daily Curator: Of Holes Being Poked Into The Bhopal Encounter And The Origins Of Chyawanprash
- Watch: Viral Video Has Man Lighting Up A Line Of Crackers Attached To His Mouth
- MOST VIEWED
- MOST COMMENTED
- Watch: Melania Trump Swats Away Husband's Hand in Full Public View
- Canada Denies Entry To Retired CRPF Officer For Serving A Govt That 'Engages In Terrorism'
- After ICJ Order On Jadhav, Kashmiri Group Asks For Global Scrutiny Of Rights Violations In Valley
- 2017 Maruti Suzuki Dzire: 5 Things We Like