GST for the Sevices Fixed; No Tax for Health care and Education

Srinagar: No tax will be imposed on new Tax System GST on education and health, while the services have been decided to levy GST at four different rates. GST Council today finalized the rates for services under the goods and services tax (GST) system. Under this, the economy will have 5% GST on the transport including an air ticket in the economy class.

The Council has decided to levy tax at 4 rate slabs of 5,12,18 and 28% for various services, including telecommunications, insurance, hotels and restaurants. These rates are also in accordance with the rates fixed for the goods. Along with this, GST rates have been fixed for all commodities except gold and few items. The government is in the process of implementing GST from July 1.

After the two-day meeting of the Council, Finance Minister Arun Jaitley said that telecom and financial services will be taxed at a standard rate of 18%. 5% tax on transport services will take place. This rate will also apply to companies offering taxi booking service from an app like Ola and Uber. At the same time, it will apply to those currently paying 6% tax.
As far as rail travel is concerned, the general category or non-air conditioned (AC) rail travel has been exempted from GST while 5% of the air-conditioned tickets will be charged. Revenue Secretary Hasmukh Adhia said that GST discounts will continue on pilgrimages including metro, local train and Haj pilgrimage. 5% on the economy class in the air travel and 12% on the business class journey will be GST.

Jaitley said 12% GST would be on food bill in the restaurant without AC. Tax rates will be 18% in the AC (air conditioned) restaurant with liquor licenses. At the same rate, the GST rate will be 28% in the 5 star hotels. Similarly, a restaurant with a business of less than Rs 50 lakh or less will be taxed at 5% rate. At the same time, work on contracts such as whitewash will be 12% GST.

Under entertainment tax, entertainment tax will be merged in service tax, whereas 28% tax will be levied on cinema services, horse racing or gambling. The proposed tax rates for cinema halls are about 40 to 55% lower than the current rates. With this, where cinema tickets can be cheaper and the right to charge them will be with the states only.
Hotels and lodges, which charge Rs.1000 per day, will be exempted in GST. At the same rate, the hotel will charge 12% for a fee of 1000 to 2000 rupees per day. Similarly, the tariff for hotel for 2500 to 5000 rupees per day will be 18%. Similarly, the tariff for hotels with a daily charge of more than Rs 5000 per day will be 28%.

Jaitley said that the issue of tax on gold and precious metals will be considered in the next meeting of the Council which will be held on June 3. Jaitley said that most service tax exemptions will continue. He said that there will be no inflationary impact of GST. Healthcare and education services will also be exempt from GST. Companies like Flipkart and Snapdeal have to deduct 1% TCS while paying suppliers. No tax will be levied on the lottery. Jaitley said that GST will be implemented from July 1 and 'we are ready for it'.

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