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Road to GST: Rates of services to be finalised today

Do you need to shell out a higher amount on air tickets? Will your telephone bills shoot up? Will restaurants charge you less on services? You are likely to get a clarity soon as the Goods and Services Tax (GST) Council headed by Finance Minister Arun Jaitley is expected to finalise the service tax rates today.

The Council will finalise the categories under which the services would fall, which is likely to be under two broad slabs --12 percent and 18 percent.

The finalisation of GST rates for goods and services is last and the most crucial step towards the rollout of India's overhauled indirect taxation regime starting July 1.

It is understood that most of the services are likely to fall under the 18 percent slab. However, some services which are regular for the common man such as air travel services, restaurants and renting of hotels, is likely to attract lower tax rate.

The original plan was to have a single tax rate—18 percent—for services under GST that would have made some services costlier under the new system.

But, the government had clarified that an increase in the numerical value of the rate may not necessarily result in all the services becoming more expensive, as the tax incidence is likely to be similar. There could be only a marginal increase in certain services.

The move will likely even out the overall price impact on consumers who now pay a tax of close to 15 percent on all services.

Most services, except those in the negative list of essential services such as healthcare and education, will come under GST.

The Council today will also finalise the GST rate of six 'contentious' categories of products—bio-diesel, beedi and cigarettes, footwear, textiles, agricultural implements and gold.

Separately, within the `food’ category a final decision on GST rates on branded cereals and packaged food including packaged fruit juices will also be taken.

The Council on Thursday fixed rates for 1211 items in its two-day meeting in Srinagar. Finance Minister Arun Jaitley has said that most of the items are likely to become cheaper as the new rates will be lower than the current effective levies.

Ministers and officials from 29 states and union territories, along with Jaitley and senior finance ministry officials converged in the Jammu and Kashmir capital to decide and fix rates on a long list of goods and services.

The GST is billed as India’s most ambitious reforms move, will stitch together a common national market, dismantle fiscal barriers among states and consolidate a patchwork of local and central duties into a single levy.

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