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GST rates on services non-inflationary: FM

Anjana Das, New Delhi
19/05/2017   0 Comments

The Goods and Services Tax Council today agreed on four tax brackets for services – 5%, 12%, 18% and 28%, and exempted Education and Healthcare from the purview of the GST, besides putting luxury services in the highest 28% tax category.

The Government also ruled out any inflationary pressure maintaining the input credit would neutralise any such impact as most of the existing exemptions are being continued under the GST. 

"We’ve made sure that the consumer does not pay more. Net effect of GST is not going to be inflationary. There will be no inflationary impact of the GST on services as they will be getting input credit for the goods used in the service. So the actual incidence will come down”, Jaitley told media after the conclusion of the two-day meeting in Srinagar.”

"We are grandfathering most of the exemptions", the Finance Minister Arun Jaitley said.

All services have been fitted into four different rates, which are 5%, 12%, the standard 18% and the luxury rate of 28%. 

Healthcare and Education services are exempted from the GST while transport services like Railways, air transport will be under the lowest 5% category as  there is no input credit tax as the input  (petroleum is outside GST net). 

Service tax on non-AC hotels will be 12% on AC hotels and those serving liquor will be 18%. There will be higher tax rate for luxury hotels. The restaurants inside the hotels will also be under 28% GST.

Hotels and lodges with tariff below Rs 1,000 will be exempted. Those with Rs 2,500-5,000 tariffs will be under the 18%. Luxury hotels will face tax of  28% GST where gambling clubs, racing clubs and cinema halls will also be taxed under the similar rate of 28%.

Telecom and financial services will attract 18% GST rate.

The next meeting of the Panel will be on June 3 to decide the rate of Gold and precious metals.

Yesterday Revenue Secretary Hashmukh Adhia had said cereals and milk will be part of the exempt list of  GST while foodgrains will be cheaper post GST roll out. Sugar,  tea, edible oil are  to be taxed at 5% under GST while coal will be taxed at 5% under the new sales tax. Only 19% of goods will be taxed above 18% and 81% of items to fall under below 18% GST rate slabs, he had said.


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