People of states will suffer if GST not implemented; Jaitley
Srinagar, May 19
The Goods and Services Tax (GST) Council today fixed the tax slabs for services in four brackets (5 per cent, 12 per cent, 18 per cent and 28 per cent) though healthcare and education sectors have been exempted from the list.
Meanwhile, decision on some items, including Gold and bidis, has been deferred till 15 GST Council Meeting scheduled in New Delhi on June 3.
However, Union Finance Minister Arun Jatley, while making the announcement during a press conference after the conclusion of 14th GST council meeting here today, asserted that the consumers will not have to pay any extra tax and the overall impact on services costs after GST will be non-inflationary.
Third tier railway travel will also be exempted from the GST list while goods transport and cab aggregates will attract a 5 per cent tax.
Hotels and restaurants depending on their services will attract different tax rates under the GST on July 1, when India’s biggest tax reform comes into force in the country.
Business class travel by airlines will attract 12 per cent while a peak rate of 28 per cent will be charged on five services including five star hotels, cinema and horse race betting.
“Restaurants with an annual turnover of less than Rs 50 lakh will fall under the 5 per cent tax slab. Non- Air-conditioned restraints will be taxed at 12 per cent while Air-conditioned eateries with liquor licences will be taxed at 18 per cent,” Mr Jatley said. He said hotels and lodges with tariff below Rs 1,000 will be exempt while those with Rs 2,500-5,000 will be charged at 18 per cent. “Luxury hotels and their restraints will face tax of 28 per cent,” he added.
Mr Jatley said there are hardly any areas where rates have been hiked. “The weighted average and given the large number of exemptions, the impact (inflationary) will be significantly below that. Keep one fact in mind that they will also start getting the input credit of goods consumed,” the Finance Minister said.
Meanwhile, under the current tax system, the work contractors pay a lot of embedded taxes. For example, they pay a tax on cement that they procure on top of the other taxes.
However, under GST, the work contractors will have to pay a uniform GST rate of 12 per cent with all input credits available. “So, effectively, though the rate is 12 per cent, the level of taxation with input credit will come down below the present level,” he said.
Mr Jaitley said tax on gold and precious metals will be taken up at the next meeting of the Council on June 3.
The Council yesterday fixed rates for 1,211 goods in four slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent, keeping most food items out of the purview of GST.
Finance Ministers and officials from 32 states and Union territories attended the meeting which finalised the fitment of each good, except some, and services in the four tax rate slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent. The GST, which will replace a plethora of central and state taxes, subsumes a slew of indirect taxes across the country into one unified tax.
Meanwhile, Union Finance minister Arun Jaitley today said that people of the states which are not going for General Services Tax (GST) will have to suffer and pay double taxes.
Talking to reporters at the end of 14th GST Council meeting here this afternoon Mr Jaitley said GST will benefit consumers in all state uniformally.
In reply to protests by some traders federation here today, Mr Jaitley said if the GST is not implemented in Jammu and Kashmir, people will have to suffer as they have to pay double taxes.
As per GST the tax will have to be paid at the source which has to be collected at any cost, he said adding but in case any state will not go for GST, the people of that state will have to pay local tax also.
We donot understand why the traders are protesting, he said adding the tax has to be paid only once under GST.
About the demand of local traders to address their concerns, the Finance Minister said the state government will take care of the demand of the traders once it will adopt the GST.