After the conclusion of the two-day meeting of the Goods and Services Tax (GST) Council, Finance Minister Arun Jaitley on Friday unveiled a multi-tiered service tax structure to distribute services under four slabs: 5, 12, 18 and 28 per cent. Under the proposed indirect tax regime, education, healthcare and non-AC rail travel will continue to remain exempted. On the other hand, luxury hotels, gambling, race-club betting and cinema services will attract a levy of 28 per cent.
Insisting that the GST, which is set for a July roll-out, will be consumer-friendly besides being an efficient tax system, Jaitley said telecom and financial services will be taxed at a standard rate of 18 per cent. Five per cent GST will also be levied on cab aggregators like Ola and Uber.
Here’s how the industry responded to the development:
Indian Beverage Association: Expressing disappointment over putting aerated beverages in 28 per cent bracket along with a cess of 12 per cent under the GST rates, the Indian Beverage Association said the move would hurt growth of the industry. The association, which has members like PepsiCo, Coca Cola, further said the increase will have a negative ripple effect. “The IBA is extremely disappointed with sweetened aerated water and flavoured water being placed in the highest tax slab rate of 28 per cent combined with an additional cess of 12 per cent,” the association said in a statement.
Confederation of All India Traders: Suggesting that first nine months of GST should be treated as a ‘trail period’, traders body CAIT said no punitive action should be taken against businesses for ‘procedural mistakes’ in order to allow them to get familiarised with the new tax regime. Reflecting on the outcome of the GST council meeting, CAIT Secretary General Praveen Khandelwal said that classification of goods under different tax slabs of
GST are ‘by and large’ fitted in the correct basket and it is expected that goods will become cheaper under the new indirect tax regime.
KPMG: According to the accounting firm, the GST council has done a commendable job by reducing the impact of GST on the common man and maintaining status quo on GST rates on the items largely consumed by the upper middle class. “It is like a mini budget short of projection of estimated revenue,” said Sachin Menon, National Head, Indirect Tax, KPMG in India.
“It is welcome to see that the education and healthcare sector is out of GST and transportation services is taxed at 5%. However, the telecom services at 18% may touch the raw nerve of the common man, as that is the only significant service that is used by majority of the population in India,” he added.
Auto Industry: Describing the clubbing of hybrid vehicles along with luxury cars in GST rates as environment unfriendly and regressive step, the auto industry said the move went against plans to promote green vehicles. Under the new GST rates, large cars with engine greater than 1,500 cc and SUVs with length more than 4 metres and engine greater than 1,500 cc are slated to attract 15 per cent cess over and above peak rate of 28 per cent. On the other hand, tax on electric vehicles has been kept at 12 per cent.
Apollo Hospitals: Leading healthcare provider Apollo Hospitals Group welcoming the GST council’s decision to exempt healthcare from the GST. “We believe that by doing so the government has accorded healthcare and education the due importance and impetus that they need to become game-changing agents for transformation of
India, its people and the economy”, Apollo Hospitals Group MD Suneeta Reddy said.