Economy

GST Council fixes 4-tier tax slab for services

Surabhi Srinagar | Updated on January 11, 2018 Published on May 19, 2017

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Education, healthcare exempt, telecom, financial services to attract 18%, transport services to be taxed at 5%

The GST Council on Friday finalised a four-tier structure for taxation of services, 5, 12, 18 and 28 per cent, in line with what has been done for goods.

While education, healthcare and third tier railway travel will be exempt from GST, goods transport and cab aggregates will attract a 5 per cent tax.

Hotels and restaurants depending on their services will attract different tax rates.

Business class travel by airlines will attract 12 per cent tax.

Telecom and financial services will attract 18 per cent GST, which is the standard rate for services.

Peak rate will apply on 5 services

Meanwhile, a peak rate of 28 per cent will be charged on five services including five star hotels, cinema and horse race betting.

The Finance Ministry will soon upload the final list of taxes on services.

Finance minister Arun Jaitley however stressed that consumers will not have to pay any extra tax and the impact will be non-inflationary.

Revenue secretary Hasmukh Adhia said companies will now get input tax credit for goods and services so the effective tax rate will be lower than the headline rate.

He also warned companies from hiking prices as they will be monitored under the anti-profiteering clause.

Tax on e-commerce has been fixed at 1 per cent.

The next GST Council meeting is on June 3 in New Delhi.

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Published on May 19, 2017
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