NEW DELHI: India has cleared the way for its biggest tax reform since independence. When the 14th Goods and Services Tax (GST) Council meeting ended on Friday, authorities had finalised the tax brackets for all but a few items.
According to the Council, services like education and healthcare would continue to be exempted from the tax ambit.
However, taxes on certain others, like telecom, would go up from July 1, by when the government plans to implement to uniform regime.
There could be a small drop in economy airfare as it would move to the 5 per cent tax bracket. The service currently attracts 6 per cent tax. However, travelling on business class would get costlier with 12 per cent tax.
Non-AC train travel, including local trains, metro and religious travel like Haj pilgrimage would be exempted from GST.
Popular cab services like Ola and Uber would also get cheaper as they would move from the current 6 per cent to 5 per cent tax slab.
Tickets for AC trains will also attract same level of taxation.
Meanwhile, prices of televisions, refrigerators and air-conditioners would go up by 4-5 per cent as they would fall under the 28 per cent tax slab.
Currently, consumer electronics and durables attract only 23 per cent tax.
Reports claimed companies would pass on the additional tax burden to consumers, affecting demand on the short-term.
No decision made on the tax rates for gold and gold jewellery.
The decision will be taken at the next meeting that is scheduled to be held in June. Earlier, some industry players had demanded gold to be put under the lowest tax bracket of 5 per cent.
At the end of the two-day meeting, Finance Minister Arun Jaitley explained the new taxation regime to the media.
“Telecom and financial services will be taxed at a standard rate of 18 per cent,” he said.
Currently, tax on phone bill payments total to 15 per cent. However, Revenue Secretary Hashmukh Adhia insisted the tax incidence on telecom will be unchanged at 15 per cent after the input credit is taken on equipment.
Entertainment tax will be merged with service tax under the GST and a composite 28 per cent tax will be levied on cinema as well as gambling and betting at race course.
Though the rate proposed for cinema halls is lower than the 40-55 per cent being levied currently, the move might not result in a reduction of prices as states continue to hold the right to levy local charges.
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Luxury, demerit products to attract cess
The cess would be levied over and above the tax
204% cess on gutkha, chewing tobacco
160% on scented Zarda and filter Khaini
12% on aerated water
15% on luxury cars
1% on small cars
3% on diesel cars
3% on 350 cc and above bikes
5% cess on cigarettes