With the approval of four tier tax rate on services — 5, 12, 18 and 28 percent— by the Council, the Government today moved a step closer to the rolling out of the most awaited GST.
“GST in relation to the service sector was completely adopted in today’s meeting. In the services sector depending on the nature of the service, and for special reasons, various categorisations have been made,” Jaitley said.
Jaitley said that the current exemptions on services such as healthcare and education will continue, and the overall impact on services costs after GST will be non-inflationary.
Transport services including air services and goods transport will be taxed at 5 percent from the existing 15 percent. Consequently, Railway, Ola, Uber rides, Filghts will be cheaper under the new indirect tax regime. Most other services split up into 12-18 percent, Jaitley said.
Restaurants with an annual turnover of less than Rs 50 lakh will be subject to 5% GST and while non-ACs food joints will be taxed at 12 percent. Air-conditioned restaurants with liquor licences will be taxed at 18 percent.
Hotels and lodges will a tariff below Rs 1000 a day are tax free under the GST regime. However, those with a room rate of between Rs 1000-Rs 2,500 will be taxed at 12 percent. Five star and luxury hotels will be taxed at a higher rate, i.e, 28 percent.
Services related to gambling, race club betting and cinema halls will also be taxed at a higher rate. Cinema halls, which are paying a service tax of 15 percent plus a state entertainment tax that ranged from 28 percent to about 100 percent currently will pay 28% under the GST. Casinos will also come under the 28 percent tax bracket.
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