GST: Arun Jaitley announces Goods and Services Tax rates
On Friday, the second day of the meeting, the Council made a decision to tax services under four slabs of 5 per cent, 12 per cent, 18 per cent and 28 per cent.
The all-powerful GST Council on day two of its fourteenth meet finalised tax rates for services under the Goods and Service Tax (GST) regime, scheduled to kick-in from July 1.
Much of the work on the GST has already been completed, including the five broad “slabs”, or tax rates. The 5 per cent rate will also will apply to cab aggregators such as Ola and Uber as well. This category of vehicles will attract 15 per cent cess over the peak rate of 28 per cent making it a total of 43 per cent.
Power companies producing thermal electricity are set to gain as the Goods and Services Tax (GST) Council has decided that coal will attract a rate of 5 per cent under the new tax regime. Jaitley is confident rates for all goods and services would be finalised by Friday.
Addressing a Press conference, Jaitley said the 5 per cent slab will mostly cater to transport services, including economy class air travel. Coal is now taxed at 11.69 per cent.
“Services, which are at now taxed 15 per cent will be fitted into the 18 per cent bracket”.
The remaining states are likely to pass the state GST Bill “before the end of this month”, except for one or two, according to a federal government statement.
Smoking mixtures for pipes and cigarettes will attract a levy of 290%.
“Telecom industry hails GST as an iconic reform but we are disappointed with announced rate of 18 per cent”. Restaurants with Rs 50 lakh or below turnover will go under the 5 per cent composition. “The overall inflationary impact will also depend on goods which are outside the 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.
In line with this principle, the council chose to exempt non-AC train travel but charge 5 per cent on tickets for travel in AC compartments.
Hotels with tariff under Rs 1,000 have been kept out of the GST, while those with room tariffs between Rs 1000-Rs 2,500 will be taxed at 12%.
Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from GST.
“Some of the key areas which would be discussed on June 3 would include GST rates for bio-diesel, beedi, footwear, textiles, agricultural implements and gold”, said Rajeev Dimri, Leader Indirect Tax, BMR & Associates in a statement here. Also, they have a tax cost on procurements of goods which they can not set off.
“My advice to all the big industry players would be that please don’t do this”.
“The tax burden has not increased in any commodity”.
The machinery for anti-profiteering will be operationalised soon, he said.
The tax department feels tax cut benefits should be passed on to consumers through more transparent billing. “The department can suo motu take action”, he said.
“(With) the standard rate items of 12.5 per cent and 15 per cent, plus the cascading effect of local taxes, the tax rate was going up to 30-31 per cent.
It seems that 81 percent of the items are under 18 percent GST while only the luxury items are at a high tax of 28 percent.
“The rates are as per the expectations of the industry and nearly all segments of the industry have benefited by way of a reduced overall tax burden in varying degree”, said SIAM President Vinod Dasari. Also, the new GST bill rates will be applicable on the items from July 1st, 2017.