GST Service tax rates are also into the pipeline and slowly they are coming into the announcement. The GST council has finalized the service tax rates on the 2nd day of its 14th meeting at Srinagar. It is worthy to notice that the education and healthcare sectors have been exempted from the service tax of GST.
The union finance minister Arun Jaitley mentioned that “India has finalized four tax rates that will apply to services including telecoms, insurance, hotels and restaurants under a new sales tax which should be rolled out on July 1.”
It is noticed that the telecom and financial services will be enjoyed at a standard rate of 18 percent while for the transporting services, it is decided that it will be taxed at 5 percent as of now. The tax rates are decided on the slab rates which were earlier stated by the GST council i.e. 5, 12, 18 and 28 percent.
It is heard that the gold rates are yet to be decided due to its unstable and global dependency nature but will be decided with conscious efforts in its next meeting on June 3. It is noticed that the new upcoming rates will not be affecting all the services which are including the hospitality, restaurant services, movies, salon services and the telecom services.
The council has decided to put the rail, road and air transport into the low 5 percent category slab as to lift the burden on common to use the transport service easily. Then regarding the Non air-conditioned restaurants, it is decided that it will fall to 12 percent while the air-conditioned restaurants will be in 18 percent GST tax rate bracket.
Talking about the hotel industry and their individual tariffs, the Hotels with tariff falling in between Rs 2,500 to Rs 5,000 will be levied GST of 18 per cent, whereas hotels with a tariff of above Rs 5,000 will come under 28 per cent tax slab. And after which, hotels with tariff under Rs 1,000 are exempted from the GST scheme.
Kerala finance minister Thomas Issac mentioned after the GST council meeting that, “Services, which are at currently taxed 15 per cent will be fitted into the 18 percent bracket. However, services will get the benefit of input tax credit for the goods used, so the real incidence of taxation will be lower than the headline rate, Luxury services would attract the highest rate of 28 percent.”
The GST Council approved the final tax rates for 1,211 items, of which 7 percent will be exempted, 14 percent will be in the 5 per cent slab, 17 per cent in the 12 percent category, 43 percent in the 18 percent segment, while 19 per cent of goods will go into the higher tax bracket of 28 percent.
Kerala finance minister also said that “Telecom services would continue to be taxed at the same rates of the past. Not in a single case has there been an increase in taxes from before.” The statistics are that 81 per cent commodities will attract a tax of 18 percent, while 19 per cent of items will be taxed at the highest rate slab of 28 percent as decided by the GST council.
The finance minister added that, “On many commodities there would be reduction because of the cascading effect, but we are banking on the hope that because of a better tax system and less evasion there would be tax buoyancy, The net effect of Goods and Services Tax will not be inflationary, 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.”
The industrial and intermediate items along with the capital goods are kept in the 18 percent slab rates. Aditya Narain, Research head at Edelweiss Securities Ltd quoted that, “GST regime will usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganized to organized players.”
