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Goods And Services Tax: Here’s What Will Be Taxed

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Goods and Services Tax is a land mark taxation reform. Till now, the taxing of products and services takes place at various touchpoints. Upon the enactment of GST, it will all be charged at one point only. For goods and services that are perishable, this means less wastage due to infrequent stops. This way, the prices of goods and services can be brought under control is the true intent of the GST. There are four tax slabs under which a good or a service will be placed – 5 per cent, 12 per cent, 18 per cent and 28 per cent. We will talk about the GST items list in a bit. Let us first talk about the impact of the GST on various stakeholders.

GST Items List - Arun Jaitley
Finance Minister Arun Jaitley may spring a surprise on next GST Council meet on June 3

With the arrival of GST, there will some impact to various businesses. This is owing to the accounting system changes, which will require an overhaul and as a result, a one-time investment. However, those in logistics business will benefit as there will be less stoppages in ferrying goods across India. In essence, less downtime in supply of goods. The government feels that such a unified taxation system will boost the government’s Make in India strategy. We’ll see how that pans out. In the meanwhile, here’s the list of goods placed under different GST tax slabs.

GST Items List

Above is the list of goods placed under different GST slabs. However, there is more. What the list above does not have is services and slabs in which they have been placed. So, take note of the pointers below to know about services and their positioning in various GST slabs:

  • Since petroleum is out GST ambit, transport services such as rail and air transport attract 5 per cent tax
  • Service tax in hotels will now vary. In a non-A/c hotels, it will be up to 12 per cent, while A/c hotels serving liquor attract 18 per cent service tax. Luxury hotels attract further higher service tax
  • A hotel/lodge charging below Rs 1,000 is exempt from GST. Those charging Rs 2,500 – 5,000 will attract 18 per cent tax. Luxury hotels attract the highest tax percentage at 28 per cent
  • On five-star hotels, race club betting and cinema, there will be 28 per cent taxation
  • 18 per cent tax will be levied on telecom and financial services.
  • Healthcare and education sit on the tax exemption list. So, hurray!
  • Services that have stayed in exemption list till now will remain there. No more services will added to the exemption list.
  • In the next meeting that takes place on June 3, decision will be taken on placing gold and bidis/ cigarettes in tax slabs too.

As it stands, the government has placed 80-90 per cent of goods and services under various tax slabs or exemption list. Come June 3, we will know the fate of the remaining goods and services. At least what we know is that no other goods/services are going in the exemption list. So, the exemption list of GST Items List will not be touched. However, let’s not keep our hopes high as the government may spring a surprise at us. Stay tuned as we bring you more developments on this topic.

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