GST Council has chose to club insurance cover with the financial services sector and tax it at 18 per cent under the GST regime, which will make it an expensive proposition from July 1.
Briefing reporters here after the two-day meeting of the Council, Finance Minister Arun Jaitey said telecom and financial services will be taxed at a standard rate of 18 per cent.
In a crucial meeting, the GST council in Srinagar today finalised the rates at which various commodities will be taxed once the one tax for all kicks in from July 1.
As far as goods are concerned, 81% of them will be taxed at 18% or less, and goods of mass consumption will attract lower rates of GST. The Goods and services Council today has released the new GST bill rates for 1,211 items.
Under the new regime, while healthcare and education services will be tax exempt, services offered at five-star hotels will be taxed at 28 percent.
The new GST structure has also brought hybrid cars under the same slab as that of large vehicles meaning a tax of 43 per cent will be levied on them. Not surprising then that the 28 percent hike came as a complete shock.
He also revealed that 50 percent of items in the retail inflation basket will not be taxed, so that a price rise in basics such as foodgrains does not adversely impact the consumer. "We hope we don't have to use the weapon (of anti-profiteering authority)", he said.
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With a better system in place, compliance will improve, he declared. Coal will be taxed at 5 percent along with a levy of 400 rupees per ton.
While meat, fresh vegetables, honey, jaggery, prasadam, kumkum, bindi, pappad and contraceptives have been exempt from GST levy, items like pizza bread, sevaiya, condensed milk, frozen vegetables will attract 5 per cent levy, as per the items list put on CBEC website late in night. Sugar, Tea, Coffee and edible oil to fall under 5 per cent slab, as per reports. Most of the items GST are kept below 18 percent.
The Tripura government held a meeting on GST with all legislators on May 12 and a workshop for the media would be held in Agartala on May 20.
"GST regime will usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganized to organized players", said Aditya Narain, Research head at Edelweiss Securities Ltd. If that doesn't happen, the session will be extended by a day, he said.
Several states including Uttar Pradesh, Andhra Pradesh, Telangana, Goa, Gujarat and Arunachal Pradesh have already passed the state GST Bills.
The Council has also chose to exempt from the purview of GST the company Goods and Services Tax Network (GSTN) set up to build the IT network for the new indirect tax regime.
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