Industry experts are hopeful from GST Regime, but some share their apprehensions on the deadline of July 1
By Faiz Askari
On Thursday itself, the GST Council approved the tax rates for 1,211 items, of which 7 percent will be exempted, 14 percent will be in the 5 percent slab, 17 percent in the 12 percent category, 43 percent in the 18 percent segment, while 19 percent of goods will go into the top tax bracket of 28 percent.
Today, the second day of the GST Council explained the categorization of ‘services’ in the GST regime. “Luxury services” would attract the highest rate of 28 percent, health and education services would be exempt categories.
“Telecom services would continue to be taxed at the same rates of the past. Not in a single case has there been an increase in taxes from before,” Mr Arun Jaitley added.
An overwhelming 81 percent of items will attract tax of 18 percent or below. Only 19 percent of items will be taxed at the highest rate of 28 percent.
Industry Experts’ Opinion on GST
Commenting on the outcome from Day 2 of GST Council meeting Rajeev Dimri, Leader, Indirect Tax, BMR & Associates LLP added, “The long wait by the industry has been concluded with the GST Council having announced the rates of goods and services in its latest meeting on May 18-19. Given the stated intention of the Government of not allowing a long lead time to the companies post announcing the rates, this development strongly indicates that Government is serious about meeting the July 1 deadline for the GST implementation date.”
During the GST Council meeting held in Srinagar this week, the Finance Minister has announced that States are vigorously working towards the July 1 deadline for the much awaited nation-wide roll-out of GST. Despite the contrary statements being made by the West Bengal Finance Minister in this regard, based on various developments on rates and rules in this GST Council Meeting, the Government appears to be more ready than ever to achieve the July 1 deadline. Based on the press conference by the Finance Minister, transportation services are being proposed to be taxed at 5 percent under GST, much to the delight of the transportation services sector and various e-commerce operators engaged in providing a platform for transportation services.”
Sharing his opinion on the recent developments regarding GST Council’s meeting, Rajeev said, “The GST Council has made its intention to tax luxury services at a higher rate quite evident by announcing different rates for services such as hotels, five-star restaurants, etc based on their tariffs and other factors which distinguish luxury services from non-luxury services. Hotels and five-star restaurants services with tariffs more than INR 5000/-, gambling, admission to cinemas and racing events have been kept at the highest rate being 28 percent. There is still no clarity on whether such services would also attract levy of an additional compensation cess. The Council has proposed a graded tax rate structure for other restaurants with small restaurants being taxed at 5 percent, other non-AC restaurants being taxed at 12 percent and AC restaurants being taxed at 18 percent.”
With certain areas pending for decision by the GST council after conclusion of today’s meeting held in Srinagar, the next meeting of the Council has been scheduled to be held in New Delhi on June 3. Some the key areas which would be discussed on June 3 would include GST rates for bio-diesel, biri and cigarettes, footwear, textiles, agricultural implements and gold.
“On many commodities there would be reduction because of the cascading effect, but we are banking on the hope that because of a better tax system and less evasion there would be tax buoyancy,” he said.
In a major measure of support to industry, the rate for capital goods, as well as industrial and intermediate items have been set at 18 percent.
Putting across another perspective on the GST Council’s deliberations, a senior tax analyst V.S Datey, Senior Consultant, Taxmann.com said the rates announced were along expected lines.
“However, it seems a lot of work is yet to be done. Exemptions and issues related to reverse charge mechanism have not been finalised, and looks doubtful that it will be done in a day,” said.
“Thus the chances of introducing GST by July 1 appears doubtful,” Datey added.
“Companies would now quickly want to compute/re-compute the impact of rate change, if any, on their products and consequential change in their related margins,” Partner in international accounting firm KPMG in India Harpreet Singh said in a statement in Srinagar.