GST council nowadays is thinking very deep about various possible points to carry out the compensation which has to be paid to the states while the extra cess would definitely help a little but in the middle of this suggestion, the council is stuck to the point of ranking the service tax into various levels, for extracting different revenue from different types of service offered.
Similarly, with respect to merchandise, the goods and service tax (GST) Council wants to bring diverse rates of tax for services too and the most elevated rate would be for “extravagance” services. This implies, rather than a uniform rate of tax on all services, including cess and surcharge, there would potentially be three rates: extravagance, standard and essential.
GST Council is practically sure to favor the three-rate structure for services for the tax framework that would take off from July 1, 2017, the central government’s Budget is additionally liable to present components of the new tax structure for services. The theme has been bantered in the board of trustees of secretaries set up by the GST Council that includes finance secretaries of nine states other than the Union Revenue Secretary Hasmukh Adhia.
Other than a conceivable change of rates for money tax, this could be the greatest tax recommendation that Finance Minister Arun Jaitley may get. At present, in spite of the uniform rates, there is a decrease accommodated a few services, as a result of which the powerful rate on them is near 12 percent. Be that as it may, the feature rate stays unaltered at 14 percent in addition to cess and surcharges.
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Since service tax involves just about 30 percent of the aggregate roundabout tax consolidates and is additionally the quickest developing part inside it, separating the level rate is an alluring suggestion for both the Center and the states. Be that as it may, on the off chance that it happens, the rate could be the same as the most noteworthy one proposed for merchandise at 28 percent — a precarious move for a few sorts of services. But as of now, there is no such framework for service tax at present. Rastogi said this makes it hard to choose what extravagance is and what a basic service is.
Anita Rastogi, partner-indirect tax at PricewaterhouseCoopers mentioned that “There is a discussion happening that the luxury services be taxed at a higher rate and essential at a lower. This may not be the best scenario, as few slab rates are ideal under GST.”
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