GST Council finalises four tax rates for services

Government ministers were continuing to meet yesterday to determine which goods fall under the GST’s five broad rates, along with final details on an exemption list, input tax credits and transitional provisions as the government races to meet the July 1 deadline for the national sales tax. Non-AC train travel will be exempt and the 5 per cent will be levied on AC travel tickets.

The current tax on toothpaste and soaps is close to 28%. The GST Council on Thursday made good progress and categorised 80 to 90 per cent goods and services under the four tax slabs stipulated under the GST Act. While the slabs have not been determined for all goods and services, it was confirmed by the finance minister in the press address after the meeting, that nearly 81 percent of the goods will be under the first three brackets, lower than 18 percent.

“The government was sensitive to the impact of higher GST slab on industry and the consumer is significantly positive”, according to Sydney-based aviation think-tank CAPA Centre of Aviation.

Eating out at a non-AC restaurant in Karnataka will be three times costlier, while AC restaurant bills will nearly double after the GST roll out on July 1. Pizza bread, sevaiya, condensed milk, frozen vegetables will attract 5 percent levy. Similarly, restaurants will also charge 18 per cent tax instead of 22 per cent.

The general feeling was that the GST Council, which met in Srinager, would settle for a maximum of 18 percent tax on hotels – still a hefty increase.

Restaurants with turnover of Rs50 lakh or below will face 5 per cent tax under GST while non-AC restaurant will face 12 per cent tax”, said Jaitley.

Jaitley said there will be no inflationary impact as most of the rates which are at 31 per cent have been brought down to 28 per cent.

A 12% tax is proposed to be levied on hotels with tariff between Rs 1,000-2,000 a night under the GST regime.

Cars, ACs, refrigerators and Aerated drinks will be in 28 percent bracket.

The tax rate on gold has not been finalised yet and it is likely to be decided in the meeting to be held on 3 June. Service tax on telecom like phone bill payment totals to 15 per cent at present.

The Finance Minister Arun Jaitley has said that healthcare and education will remain exempted from the GST.

Jaitley said July 1 will be the rollout date for GST.

There is still scope for changes to the rates before they are set in stone.

“My advice to all the big industry players would be that please don’t do this”. Basic food items like cereals, eggs and meat will attract no tax after the GST is effective.

The machinery for anti-profiteering will be operationalised soon, he said.