Srinagar, May 19: The service tax rates were finalised today at the meeting of GST Council. The participants of the meet broadly agreed on fixing four tax brackets – 5, 12, 18 and 28 per cent, said Finance Minister Arun Jaitley. Among major decisions taken by the Council, includes the exemption of healthcare and education from GST ambit. The Council could not arrive at a consensus for fixing the service tax rate for gold, cigarettes and bidis. Here are 10 major updates to the story:

  • The GST rate on transport services – air, road and railways, will fall under the 5 per cent bracket. The low GST rate is primarily due to the exemption of petroleum from GST ambit.
  • Service tax on non-AC hotels under the new taxation mechanism would be 12 per cent. For AC restaurants with liquor licence, the GST rate would be as high as 18 per cent. Service tax on restaurants in five star hotel to be same as normal restaurants, Jaitley confirmed.
  • Jaitley further announced that hotels and lodges charging customers below Rs 1,000 per day would be exempt from GST. Those charging in the range of Rs 2,500-5,000 will be taxed at 18 per cent. Luxury hotels will have to bear taxes up to 28 per cent, the Finance Minister said.
  • “The decisions by GST Council has been taken keeping the common person in mind. The Bill is consumer friendly. We have fixed the rates with consensus. Everyone’s concern were taken into account. There are hardly any area where rates have been hiked,” Jaitley said.
  • Five star hotels, race betting-clubs and cinema would fall under the 28 per cent tax slab, whereas, telecom and financial services would fall under the 18 per cent bracket.
  • The Council members could not arrive at consensus to fix GST rates for gold, cigarettes and bidis. The decision would be taken at next GST Council meeting scheduled on June 3.
  • No new services were added in the list of exempted categories. Services which fall under the exempt category under the incumbent indirect tax structure would not be revoked.
  • In the E-Commerce sector, tax would be deducted at source before paying sellers. The e-retailing giants – Flipkart and Snapdeal would be covered under GST.
  • According to tax experts, the GST rate proposed by government would be non-inflationary in nature, as a wide range of food items, which cover nearly 50% of consumer base, is kept out of the tax net.