GST rates: 83 services exempt, 13 in 5 % slab
By Rob 0
Srinagar: Thirteen services including travelling by road and by air in the economy class or to any airport covered under the government’s regional connectivity scheme will attract a concessional 5% goods and service tax (GST) rate, while seven services including rail freight, business class air travel and construction services will be taxed at 12%, as per the full GST schedule on services released by the federal indirect tax body the GST Council here late on Friday night.
The Council decided to continue tax exemption on services including health, education, select government services, budget hotels charging less than Rs1,000 a day and services given to international bodies like the UN.
It also added a new item to the exemption list —services provided by the Goods and Services Tax Network (GSTN) , the company that provides the IT infrastructure to union and state governments and union territories for the new indirect tax regime. That takes the total number of services out of GST to 83.
The bulk of the services including seven specified services such as work contracts, hotels charging Rs2,500-5,000 rent a day and outdoor catering of food and drinks as well as all other services not specified in the schedule will be taxed at 18%.
Also Read: GST rates: Flight tickets of economy class to get cheaper from 1 July
The government has over the last several years widened the service tax base through a negative list-based approach as per which all services other than those that are specifically excluded from taxation are taxed. In 2016-17, service tax collection jumped to Rs2.54 trillion from Rs2.11 trillion a year ago.
Finance minister Arun Jaitley had on Thursday evening said that GST is not inflationary on goods or services. GST is designed to eliminate the incidence in the current tax system of ‘tax on tax’ that gets embedded when credit for various levies are not fully given.
Industry players, however, expressed some concerns.
Bipin Sapra, Tax Partner, EY India said that while the efficiencies because of GST design will lower the effective tax rate, the overall rates of services are still higher than expected in some categories like luxury hotels, cinema halls and even essential sectors like telecom which has been taxed at 18%.
Services of five star hotels, race clubs and cinema as well as betting and gambling, regarded as ‘sin services’ will attract 28% slab.
First Published: Sat, May 20 2017. 11 50 AM IST