GST Rates Finalized: Travel Gets Cheaper, Health & Education Exempted

The GST (Goods and Services Tax) Council met on Friday in Srinagar and finalized tax rates for services such as Restaurant, Movie ticket rates, phone bills, vehicle purchases etc.

The tax on services has been divided into four slabs of 5, 12, 18 and 28 percent. The service tax rate currently stands at 15 percent. The Council has approved the tax rates for 1,211 items, of which 81 per cent items will attract tax of 18 per cent or below and the remaining 19 per cent of items will be taxed at the highest rate of 28 per cent. A total of 7% of items have been kept at zero tax rate.

The govt. has decided to levy zero tax on majority of essential food items, which comprise nearly 50 per cent in the consumer price index. The processed food items however will be charged between 12 and 28 per cent.

Education and healthcare sectors have been exempted from the GST regime whereas the Telecom and financial services will continue to be taxed at the standard rate of 18 percent. Non AC restaurants will attract a tax of 12 per cent whereas air-conditioned restaurants will fall in the 18 per cent tax slab.

Transport services will be taxed at 5%. Travelling on metro, local train and religious yathras have all been exempted from GST. AC train travel, Flight travel and hiring cabs will get relatively cheaper.

The highest rate of 28 per cent tax would be levied on luxury services such as races, betting and cinema halls. Levying 28 percent tax on cinema halls will help Bollywood but will adversely affect the southern film industries.

The items which have been put in the 28% slab include aerated drinks, perfumes, after-shave lotions, cars, two-wheelers, air conditioners, make up products, cement, refrigerators etc.

The tax rate on certain items including gold, cigarettes and footwear has not been finalized today so it is expected to be finalized when the Council meets again on June 3.

This new sales tax system will be rolled out on July 1, this year announced Finance Minister Arun Jaitley. The system is expected to add 2 per cent to the country’s GDP.