GST Council fixes 4-tier tax slab for services

May 22, 2017 12:40 IST

GST Council fixes 4-tier tax slab for servicesThe Goods and Services Tax (GST) Council on 19 May 2017 finalised a four-tier structure for taxation of services in line with the tax slab for goods. This four-tier tax slab includes- 5, 12, 18 and 28 per cent.

The bulk of services will fall in the 18 per cent bracket, including financial services such as banking and insurance, telecom, information technology, government services such as auction of resources including spectrum, and restaurants that have air-conditioning or serve liquor.

GST Rates

Services

Exemptions

5 %

Transport services, Cab aggregates like Ola and Uber, Restaurants with Rs 50 lakh annual turnover, AC rail travel, Economy Air tickets

Education

Healthcare

Third Tier Railway Travel

Metro Travel

Local Train

Religious Travel (including Hajj)

 

12 %

Non-AC restaurants that don’t serve liquor, Hotels with room tariffs below Rs 2500, Business class air travel, Work contracts

18 %

Hotels with Rs 2500-5000 room rents, Telecom and Financial Services, AC Restaurants with liquor license

28 %

Five-Star Hotels, Movie Tickets, Racing, Betting on Racing, Casinos

 GST Rates for Services
Education, Healthcare and Third Tier Railway Travel will be exempted from GST.

Goods transport and Cab aggregates like Ola and Uber will attract a 5 per cent GST. This low GST is due the reason that there is no input tax credit for their key input 'fuel'. However, the tax will go up once petrol and diesel are brought under the GST.

Hotels and restaurants, depending on their services, will attract different tax rates.

Non-AC restaurants and those that don’t serve liquor will attract 12 per cent GST. Smaller restaurants with less than Rs 50 lakh annual turnover can avail of the composition scheme with 5 per cent GST.

As for the hospitality industry, those with room tariffs below Rs 2500 will face 12 per cent GST, those with Rs 2500-5000 rents will face 18 per cent GST and five-star hotels will face 28 per cent GST.

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Business class air travel will attract 12 per cent GST while economy tickets will face 5 per cent GST.

In the case of railways, AC rail travel will face 5 per cent GST with the facility of input credit of services, while sleeper, metro ticket and seasonal passes will remain exempt.

Railway freight will face 5 per cent tax with input tax credit for services.

Work contracts that now attract 6 per cent service tax plus state taxes of 1-2 per cent without any input tax credit, will now face 12 per cent with input tax credit.

Telecom and Financial Services will attract 18 per cent GST, which is the standard rate for services.

A peak rate of 28 per cent will be charged on five services including five-star hotels, movie tickets, racing, betting on racing and casinos.

Tax on e-commerce was fixed at 1 per cent.

 

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