18% GST rate disappoints telecom industry

Regolare Commento Stampare

The Goods and Services Tax Council, the apex body to fix tax rates under the new indirect tax regime, today finalised the tax rates for services under the GST, which is scheduled to be rolled out from 1 July.

The GST Council on Thursday finalised tax rates of goods and services under the four-slab structure with essential items of daily use being kept in the lowest bracket of 5 percent.

The GST Council, in its meeting held on 18 May, decided the tax rate for 1,211 goods, keeping most food items out of the purview of GST.

On a positive note, Anshuman Magazine, chairman, India and South-East Asia, CBRE, said the removal of various tax barriers and creation of a common market will improve supply chain efficiency and attract more FDI. He also said that entertainment tax will be merged with the service tax at 28 per cent. Hotels, gambling, race club betting and cinema will all be levied GST at 28 per cent. Under GST regime, all non-AC restaurants will be taxed at 12% after all the local levies are subsumed under one tax. The service tax rate now stands at 15 percent.

Several states, including Bengal and Kerala, had sought a 2 per cent GST on gold, while some others had sought a 5 per cent tax, arguing that gold consumption was a luxury and needed to be discouraged.

Capital goods, a basic requirement in the manufacturing sector, will be taxed at a rate of 28%. Similarly, high-end motorcycles fall under 3% cess and 28% GST rate.

He also revealed that 50 percent of items in the retail inflation basket will not be taxed, so that a price rise in basics such as foodgrains does not adversely impact the consumer. "We can only hope that is agreed to when valuation rules are more clearly defined".

With a better system in place, compliance will improve, he declared.

Coal will attract the GST of 5 per cent as against the current tax incidence of 11.69 per cent.

The Council did not take any decision on services tax rates. The cess will be used to compensate the states for revenue loss arising out of the GST implementation in first five years.

Adhia warned of industry changing rates before the GST rollout saying that under the anti-profiteering law, any entity can be called in to question for their actions after today.

However the industry said tax as a matter of principle is a pass through to consumers, and any increase in incidence of taxation will reflect in the monthly bills.

Mid-sized cars, SUVs and luxury cars will all attract 15 per cent cess, same as that for buses and vans that can carry more than 10 persons.

The Council has also made a decision to exempt from the purview of GST the company Goods and Services Tax Network (GSTN) set up to build the IT network for the new indirect tax regime.