Union Finance Minister Arun Jaitley at the first day of the two-day meeting in Srinagar of the GST Council Council said that today they will decide on the rate of tax for services. A total of 7% of goods have been kept zero rated. Economy class air travel will attract 5 per cent GST while business class will be charged 12 per cent, he said.
The GST will be a national sales tax that will be levied on consumption of goods or use of services. Indian candies, that is, mithai, will be categorised in the 5 percent bracket.
Meanwhile, prices of televisions, refrigerators and air-conditioners would go up by 4-5 per cent as they would fall under the 28 per cent tax slab. "This will increase the incidence of tax for customers from the existing 15 per cent to 18 per cent", said Gopal Balachandran, Chief Financial Officer, ICICI Lombard.
"In our view, GST rates in most cases are in line with the prior rates/expectations set by the government in previous briefings".
No decision made on the tax rates for gold and gold jewellery. After GST, the item will attract a GST rate of 5%.
Services, entertainment and movie tickets services to levy 18 per cent. 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.
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Consumer durables such as air conditioner and fridge too are in the 28 per cent GST bracket.
Aerated drinks and cars will be in 28 per cent bracket. AC restaurants and those with liquor licence to attract 18%, 5-star hotels 28 per cent and hotels with tariff of 1,000-2,500 rupees 12 per cent tax slab. The service now attracts 6 per cent tax.
"There will be no inflationary impact as most of the rates which are at 31 per cent have been brought down to 28 per cent", finance minister Arun Jaitley said. Branded gutkha will be slapped with a cess of 72 per cent, while smoking mixtures for pipes and cigarettes will attract a levy 290 per cent. Filter and non-filter cigarettes not exceeding 65 mm will attract cess of 5 per cent plus Rs 1,591 per 1000 sticks. The exempted list has 229 items at the central level and 99 in the states. On We need some more input on the pending issues. Healthcare and education will be exempted from GST. There is no increase.
Several analysts have opined that consumers may have to bear the brunt of the higher tax.
Goods and Services Tax bill is a taxation system, which will merge many individual taxes into one applied tax.
"In the overall basket there will be a reduction... but because of greater efficiency and less tax evasion there will be revenue buoyancy and tax collection will go up", he said.
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