Two rates for services under GST, says govt

two rates GST

The government said that there will be two slabs for services under GST, with segments such as transport facing a lower levy compared to the 18% tax on several services.

While a decision on the rates would be taken by the GST Council, comprising Union finance minister Arun Jaitleyand state FMs, revenue secretary Hasmukh Adhia said that services such as transport, where fuel was a major component, could face a lower levy, with tax practitioners talking of a 12% tax on such services. “The abatement rate has to be factored in and there can be more than one rate,” Adhia told reporters.

Currently, on several services, only a part of the fee is treated as service. For instance, when it comes to goods transport, service tax is levied on 30% of the bill. Currently, service tax is pegged at 15% but the actual levy in several categories is much lower.

Apart from being a service where the main input, petrol and diesel have been kept out of the GST net, transportation is a key service for the economy and a steep rise in the levy will push up transportation costs for the economy.

 “Wherever public interest is involved, the government will have to ensure that the actual incidence does not rise much. This will include railways, construction and restaurants,” said service tax lawyer R S Sharma. Although petroleum products — from crude to petrol, diesel, natural gas and aviation fuel — are currently out of GST, Adhia told reporters, there will be an annual review and the GST Council will decide amid indications that the Centre will seek to include the key revenue generator.

The revenue secretary, Hasmukh Adhia, also reiterated the government’s keenness to move to GST from July and said that states are expected to enact state laws by the end of May.

 “Trade and industry should not be complacent. There will be no change for small traders and the ERP software of the large players are being upgraded.” He also sought to allay fears over a possible price rise following GST given that cascading effect of taxes will go away. “Almost 60% income of the Centre and the states comes from items that attract 14% VAT and 12.5% excise duty. There will be a likely decrease in the tax on each of these items under GST,” Adhia said.
He said that once the new indirect tax regime is rolled out, the incidence of tax on imported goods would be the same as on the locally manufactured items. Imported goods, he said, will be subject to Integrated GST (IGST) for which credit can be claimed at the time of sale. IGST is just an interim tax or a washout tax which is equivalent to the GST rate on a specific product. In case of locally manufactured goods, a similar GST rate will be applicable and hence, there will be no advantage for the imported goods. The government levies countervailing duty (CVD) and special additional duty (SAD) on imported goods to protect domestic manufacturers.
Source :  TOI
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s