Tax slabs under new indirect tax regime: Services by GSTN to Centre, state govts to be exempt, too

Services such as those of tour operators, leasing of aircrafts, economy class air travel, transport of goods by rail, rail travel other than sleeper class and radio taxi travel will attract a 5 per cent levy under GST.

Written by Aanchal Magazine | Srinagar | Published:May 21, 2017 1:47 am

Services provided by Goods and Services Tax Network (GSTN) to the central government or state governments/union territories for implementation of GST is the new addition in the list of exempted services decided by the GST Council in its two-day meeting, which ended Friday. All other service tax exemptions will be continued under the indirect tax regime, which is proposed to be rolled out from July 1.

Total 83 services have been exempted under GST including education, healthcare, service of access to a road or a bridge on payment of toll charges, transmission or distribution of electricity by an electricity transmission/distribution utility, services provided to UN or international organisation and consular services provided to foreign diplomatic mission, the details on service tax list for GST released by CBEC showed.

The tax department has also released the list of services for reverse charge, a levy which was introduced in Central GST law that has to be paid by the recipient of a taxable good or service in case the supplier is unregistered. The services under the reverse charge list include services provided by a goods transport agency for transportation of goods by road, radio taxi or passenger transport services provided through electronic commerce operator and services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than government.

The GST Council had on Friday decided to tax services in four tax slabs of 5,12,18, 28 per cent for GST, with maximum services in the 18 per cent rate. The existing rate for services in a single rate of 15 per cent.

Services such as those of tour operators, leasing of aircrafts, economy class air travel, transport of goods by rail, rail travel other than sleeper class and radio taxi travel will attract a 5 per cent levy under GST. Under the 12 per cent tax slab, services such as transport of goods in containers by rail by any person other than Indian Railways, non-AC restaurants and temporary transfer or permission to use intellectual property have been included.

Supply of food/drinks in outdoor catering, services of AC restaurants or those with liquor licence, theatrical/folk dance/ Indian classical dance performance and composite supply of works contract as defined in CGST law will attract 18 per cent tax rate.

Only five categories of services have been classified under 28 per cent tax slab. Services pertaining to entertainment events, amusement facilities, sporting events such as IPL race club betting, 5-star or above rated hotels will invite a tax rate of 28 per cent.

The government has said that this list of taxation rates for goods and services will be subject to further vetting during which the list may undergo some changes. The next meeting of the Council is slated for June 3, wherein tax on gold and precious metals will be taken up for discussion. Also, no tax has been decided for lottery and is likely to be discussed along with pending two rules of transition provision and returns in the next meeting.

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