GST council meet:Telecom, biz-class airfare, advts costly; edu, healthcare exempted

Transport services will be taxed at 5 percent leading to a small in economy class air travel which currently attracts 6 per cent service tax.

JOYEETA DEY
Srinagar, Publish Date: May 20 2017 12:19AM | Updated Date: May 20 2017 1:53AM
GST council meet:Telecom, biz-class airfare, advts costly; edu, healthcare exemptedGK Photo

Education and healthcare will continue to be exempted from tax in the upcoming GST regime that will see service tax incidence go up on telecom, business class air travel, insurance and sale of newspaper space for advertisement.

Transport services will be taxed at 5 percent leading to a small drop in economy class air travel which currently attracts 6 per cent service tax.

Non AC train travel, including in local trains and metro, as well as religious travel including Haj yatra will remain exempted from GST.

Five per cent rate will also apply to cab aggregators like Ola and Uber, which currently pay 6 per cent tax. AC train travel will attract 5 per cent service tax, same as freight levy.

The all-powerful GST Council finalised four tax rates of 5, 12, 18 and 28 per cent for services including telecom, insurance, hotels and restaurants under the biggest tax reform since the Independence.

The rates are in line with those finalised for goods. With this, rates of all items except a handful including gold, have been decided ahead of the roll out of the Goods and Services Tax (GST) regime from July 1.

Space selling for advertisement in newspapers will attract 5 per cent levy in GST. It is exempted from tax currently.

Briefing reporters here after the two-day meeting of the Council, Finance Minister Arun Jaitley said telecom and financial services will be taxed at a standard rate of 18 per cent.

Service tax on telecom like phone bill payment totals to 15 per cent at present.

However, Revenue Secretary Hashmukh Adhia insisted that the tax incidence on telecom services will be unchanged at 15 per cent after the input credit is taken on equipment.

While economy class air travel will attract 5 per cent GST, the business class will be charged at 12 cent, he said.

Jaitley said non-AC restaurants will charge 12 per cent GST on food bill. The tax rate for AC restaurants and those with liquor licence will be 18 per cent, while 5-star hotels will charge 28 per cent GST.

Restaurants with Rs 50 lakh or below turnover will go under the 5 per cent composition, he said.

Work contracts like white washing will be liable for a 12 per cent GST. 

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