Services to have 4-slab GST rates, no decision on gold

Srinagar: In a move expected to bring prices down from the current levels, the Goods and Services Tax (GST) Council on Friday decided on a four-slab tax rate for services along with the novel concept of input credit for goods used.

Jaitley said there would be a 5 per cent tax on carriage of goods by rail, road and air transport services because their main input is petroleum.

"The uniform GST will be at 12 per cent, while the entire credit inputs will now be available and, thus the level of taxes will come down below the present level," he added. IT, telecom and financial services will be taxed at the rate of 18 per cent.

for services... we are grandfathering most of the existing exemptions because we don't want any adverse impact of taxation in those areas," Jaitley said.

Speaking to reporters after the meeting, Kerala Finance Minister Thomas Isaac said that "not in a single case has there been an increase in taxes from before".

The Council on Thursday approved the tax rates for 1,211 items, of which 7 per cent will be exempted, 14 per cent will be in the 5 per cent slab, 17 per cent in the 12 per cent category, 43 per cent in the 18 per cent segment, while 19 per cent of goods will go into the top tax bracket of 28 per cent.

"Six items still have to be decided and we need more time for discussions," he added referring to the 6 categories of goods.

"GST rates are likely to be almost neutral for the commercial vehicles and two-wheelers, and would marginally increase for three-wheelers. The automobile sector will also see some benefits by virtue of input tax credit norms," Ray said.

"Levying GST at the demerit rate of 28 per cent for 5 star hotels could be a dampener for the tourism sector especially in cases of business travel," he added.

CRISIL Research felt the benefits of GST on business practices and company strategies will only be seen in the medium term. "The extent of business efficiency is estimated to be higher in goods as compared to services," it said.