GST council finalises tax rates on services

Paving the way for the implementation of the biggest tax reform post-independence, the Goods and Services Tax (GST) Council has finalised four tax rates on services pertaining to telecom, insurance, hotels and restaurants.

As per the latest developments, education and healthcare will continue to be exempted from taxation in the upcoming GST regime.

The GST Council finalised four tax rates of 5, 12, 18 and 28 per cent for services, including telecom, insurance, hotels and restaurants.

Only five services — including five-star hotels, movie tickets, racing, betting on racing and casinos — will attract 28 per cent  tax.

The rates of all items except a handful including gold, have been decided ahead of the rollout of the GST regime from July 1.

The above mentioned developments were made post the two-day meeting of the Council headed by  Finance Minister Arun Jaitley.

Further, transport services will be taxed at five per cent. This rate will apply to cab aggregators like Ola and Uber as well as those who currently pay six per cent tax.

Non-AC train travel will be exempted and the five per cent will be levied on AC travel tickets.

“Travelling on metro, local train and religious travel including Haj yatra will all continue to be exempt from GST,” said Hashmukh Adhia, the revenue secretary with Ministry of Finance.

“Economy class air travel will attract five per cent GST while business class will be charged 12 cent”, he said.

While non-AC restaurants will charge 12 per cent GST on food bill, tax rate for AC restaurants with liquor licence will be 18 per cent.

Five-star hotels will charge with 28 per cent GST. Restaurants with Rs 50 lakh or below turnover will go under the 5 per cent composition, he said.

Work contracts like white washing will be liable for a 12 per cent 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.

Hotels and lodges charging per day tariff of Rs 1,000 will be exempted from GST. The rate for hotels with tariff of Rs 1,000 to 2,000 per day would be 12 per cent while those with tariff of Rs 2,500 to Rs 5,000 would be 18 per cent.

GST for hotels with tariff above Rs 5,000 will be 28 per cent.

The finance minister said the tax on gold and precious metals will be taken up at the next meeting of the Council on June 3.

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