Published: Wed, May 24, 2017
Life&Culture | By Rose Hansen

Services to have 4-slab GST rates, no decision on gold


Addressing a Press conference, Jaitley said the 5 per cent slab will mostly cater to transport services, including economy class air travel. With this, rates of all items except a handful including gold, have been decided.

He said that while "luxury services" would attract the highest rate of 28 per cent, health and education services would be exempt categories.

For the first time, New Delhi has spelled out its stand on implementation of GST in the state, which enjoys a special status and has autonomy to tax services unlike other states, .

With the legislative groundwork for the transition to the Goods and Services Tax regime largely wrapped up, the GST Council's 14th round deliberations in Srinagar over the last two days were focused on the most contentious non-legislative agenda items - the approval of the GST rules, the fitment of over 1,200 commodities into the five pre-announced tax slabs and the tax rates on services.

"The uniform GST will be at 12 per cent, while the entire credit inputs will now be available and, thus the level of taxes will come down below the present level", he added. 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.

Finance Ministry Arun Jaitley claimed that GST Bill will be consumer friendly.

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While automakers of small cars will have something to worry about, luxury auto makers hope to see positive results with the implementation of GST which puts a fixed slab of 28% even on large luxury vehicles and SUVs. It is exempted from tax now.

And while some states have high entertainment tax (Uttar Pradesh levies 65 per cent and Maharashtra 45 per cent, for instance), under their industrial policy, state governments also allow tax exemption for new properties, said Utkarsh Sanghvi, tax partner - media & entertainment at EY India. "However, the benefits of GST on business practises and company strategies will be seen only in the medium term of 1-3 years", its research wing said.

Jaitley said, "As I said, we made sure that consumers don't have to pay more".

"Further, entire input credit is also allowed to the sector".

The GST Council has fitted the goods and services in tax brackets of 5, 12, 18 and 28 per cent. Service tax on telecom like phone bill payment totals to 15 per cent at present. On 6 April, Parliament passed four GST bills which now have to be ratified by all states to enable the shift to GST on 1 July. Similarly, if the cost of the flat was above Rs 1 crore and the size of the unit was more than 2,000 sq ft, the abatement was reduced to 70 percent and the effective tax rate to be borne by the buyer was 5 percent.

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