1. GST rate on telecom, financial services fixed at 18%; education, healthcare exempted; decision on gold later

GST rate on telecom, financial services fixed at 18%; education, healthcare exempted; decision on gold later

The GST council has fixed a tax rate of 18% on telecommunication services and financial services, while exempting education and healthcare from the levy altogether.

By: | Updated: May 19, 2017 3:11 PM
GST rates have effectively made foodgrains cheaper, while exempting essential items such as cereals and milk from the levy altogether.

The GST council has fixed a tax rate of 18% on telecommunication services and financial services, while exempting education and healthcare from the levy altogether. Following in the footsteps of its earlier decision from yesterday of taxing luxury goods at 28%, the council has decided to tax luxury services, such as 5-star hotels, too at the same higher rate.

The council, which is meeting in Srinagar over two days to finalise the rates and rules before the July 1 implementation deadline, yesterday fixed tax rates on all but six of the 1,211 items.

Just like the tax slabs on goods, the services too will fall under four tax brackets: 5%, 12% 18% and 28%. While a bulk of the services would fall under the two primary tax slabs of 12% and 18%, all hotel services with tariff over Rs 5,000 would be taxed at 28%.

The council has deferred the decision on the tax rates for gold, and also on bidis and cigarettes, to its next meeting, which is scheduled for June 3. The council will decide the tax rates for the remaining services and other remaining goods also in the June 3 meeting. The ministers present at the council told reporters in Srinagar that most service structures would remain as in the past.

Yesterday, the GST council, tasked with framing rules for the implementation of most sweeping tax reform India has ever seen since independence, finalised tax rates under the new proposed regime for most of the consumer goods, including items of daily use, eatables, durables, automobiles and more.

Under the new GST regime, there are four tax slabs, fixed at 5%, 12%, 18% and 28%. Other than this, some essential items would be exempt from a tax levy, while certain luxury goods and sin goods would attract cess over and above their 28% tax levy. The GST Council has kept 81% of the items in the first three tax brackets, ie, up to 18%. The 12% and 18% tax bracket together account for two-thirds of all items. Essential daily consumption Items will be exempt from tax under GST, including, fresh meat, fish, chicken, eggs, milk, curd, natural honey, fresh fruits, vegetables, flour and bread.

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