4-slab service tax surprise
New Delhi, May 19: Air transport and accommodation in five-star hotels could turn out to be a bit cheaper, but insurance premiums and transaction fees on purchases of securities will increase when the property tax system And services will begin on July 1.
The GST Council has surprised the industry by publishing a GST tariff structure with four pastes for service at the end of a two-day meeting in Srinagar.
The four rate will be 5, 12, 18 and 28 percent – reflecting closely the price structure of manufactured goods. The industry expects that most services are grouped into two plates: 12 and 18 percent.
Health care and education are exempt from GST in services.
The revenue secretary, Hasmukh Adhia, said that the economy airline tickets class would receive a GST rate of 5%, slightly lower than the existing service rate of 6%. Executive class tickets will attract a 12% GST rate.
For the railways, the second class will be exempt from VAT, while passengers traveling in the CA will be taxed at 5%. Rail freight services will be charged 5%.
“The net effect of the GST will not be inflationary,” Finance Minister Arun Jaitley said. The Board has set the GST rate to more than 1200 manufactured yesterday.
The tax rate on gold, beedi, biscuits, textiles and shoes have not yet been decided. The meeting will meet again June 3 to set those rates and decide on other procedural forms related to the deployment of the GST.
Although five-star hotels impose the maximum rate of 28 percent GST, Jaitley said it would be lower than existing rates that are between 30 and 35 percent, as a result of a combination of service fee and several state taxes deluxe.
Hotels with a room rate of Rs 1000-2500 impose a GST rate of 12 percent, while those with levels below Rs 1000 will be exempt from the national crop.
Hotels with room rates between Rs 2,500 and 5,000 rupees (mostly three and four stars) will be in the 18% range.
“A lower tax rate for the economy-friendly hotel sector will further enhance the quality of the industry, and save and create thousands of new jobs.The industry must contribute $ 280 billion to GDP by 2026 and to pass on the benefits Of the uniform tax across the country for travelers, “said Ritesh Agarwal, founder and CEO of Oyo.
However, a sector of the travel industry and hotel was frustrated by the difference in tax treatment of hotels. “This suggests that staying in a five-star hotel is a sin. If we want to encourage tourism, we must reduce hotel prices to levels that are closer to our rivals in Southeast Asia, not to raise them,” he said. Krishnalekha Ghosh, CEO of travel company GlobeAir Ltd.
The highest rate of 28 percent is applied on movie tickets, racing clubs and paris accountants. Experts said movie ticket prices could fall in Mumbai, where current withdrawals hover around 40 percent, but not in other cities.
Mobile phone bills could also increase as the GST rate was set at 18 percent, prompting telecoms operators to complain about the growing tension in a sector already bleeding.
“We are disappointed with the announced rate of 18%. We have submitted to the government’s attention to the current financial situation of the sector, and any rate higher than the current rate of 15% makes the telecommunications services for the consumer more expensive,” said Rajan S. Mathews, CEO of the Association of Cellular Operators in India.
“It can also slow down planned deployment of infrastructure in the country and will have an impact on government flagship initiatives such as India’s digital and cashless India.”
Taxi aggregators like Uber Ola and breathing with ease. GST rate in its services was set at 5 percent compared to an existing 6 percent. The great fear was that they would be included in the 12 percent category, which would have an impact on driving prices.
“We were hoping that some parts of the banking, financial services and insurance (BFSI) sector could be classified according to the lowest rate of 12 percent, especially life insurance.