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India finalises four tax rates for services

22 Mai 2017

The telecom industry, expressing its disappointment over the 18 per cent Goods and Services Tax (GST) rates, on Friday said it will further stress the already bleeding balance sheet of the sector and may negatively impact consumers.

The Council in its meeting on Thursday decide the tax rate on 1,211 goods, keeping most food items out of the purview of GST.

There will be four rates for services at 5%, 12%, a standard rate of 18% and luxury rate of 28%.

Telecom group COAI (Cellular Operators Association of India) Friday said that 18% of levy under the new GST (Goods and Service Tax) will make telecom services costlier for consumers.

On a positive note, Anshuman Magazine, chairman, India and South-East Asia, CBRE, said the removal of various tax barriers and creation of a common market will improve supply chain efficiency and attract more FDI. GST will see the base 28% tax and 15% cess taking total taxes on such models to 43% which is lower than current rate which could result in a lower pricing.

Five per cent rate will also apply to cab aggregators like Ola and Uber, which now pay 6 per cent tax. The maximum tax rate would be in case of hotels that have tariff of more than Rs 5,000.

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Motorcycles, baby carriages and razors will face a 28 per cent rate The rules of transition and returns have also yet to be approved, Adhia said.

The items that are not essential but are then used by a large number of people have been put in the 12 per cent tax slab.

Aerated drinks are taxed at GST of 28 percent. The next meeting of the Council is slated for June 3, wherein tax on gold and precious metals will be taken up for discussion.

Adhia said the government will soon begin work on setting up an anti-profiteering agency, as proposed in the GST law and the tax department may even initiate suo motu action against firms.

"Thus the chances of introducing GST by July 1 appears doubtful", he added. GST will replace many indirect taxes imposed by the centre and the states.

Staples like pulses and rice, milk, cereals and other foodgrain will get cheaper as these have been added to the exempt list, meaning there will be no GST on these commodities. "The net effect of goods and services is not going to be inflationary because, once the system of input credits starts the actual incidence is going to be positively impacted", he said. Hair oil, soaps and toothpaste will be charged with a single tax of 18 per cent instead of present 22-24 per cent tax.

India finalises four tax rates for services