IGST

Service Tax Rate to Rise from 15 % to 18 % in GST

Services sector is likely to attract a higher tax rate of 18 percent from the current 15 percent under the Goods and Services Tax (GST) regime, thus making services "slightly" more expensive, Revenue Secretary Hasmukh Adhia has said. However, those exempted at present -- like healthcare, education and agriculture -- are likely to remain so. "Whatever is in the present exempt list, we will try to continue it. We would recommend this to the Council and it will take a view on it. Most probably they should agree. Our attempt is not to upset too many things in one go," he said. At present, the services sector is taxed at 14 percent with two additional cesses -- Swachh Bharat Cess and the Krishi Kalyan Cess attracting half a percent each -- taking the burden to 15 percent. However, those who earn less than Rs 20 lakh a year will not have to register under the GST or pay any service tax, Adhia clarified later. At present, service tax has to be paid if the income is above Rs 10 lakh. The GST law also says that agriculturalists -- who employ themselves or their family members -- will not come under GST even if their turnover is over Rs 20 lakh annually. Those who are employing persons and have a turnover of over Rs 20 lakh a year will have to register under the GST.