Healthcare and educational services have been exempted from the purview of the Goods and Services Tax (GST). The decision was taken in a meeting of GST Council led by Finance Minister Arun Jaitley in which the tax bracket for gold was not finalised.
Kerala Finance Minister Thomas Isaac said while "luxury services" would attract the highest rate of 28 per cent, health and education services would be exempt categories.
"There is no increase in taxes of the items considered today. In fact, for many of them, taxes have come down," Jaitley told reporters. A decision was taken to apply the same four tax rate slabs for services and goods.
Jaitley said that the overall basket of taxes will see a reduction. He hoped for greater tax buoyancy because of greater efficiency and less tax evasion.
"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 per cent.
An overwhelming 81 per cent of items will attract tax of 18 per cent or below. Only 19 per cent of items will be taxed at the highest rate of 28 per cent.
NOTHING ON GOLD YET
Kerala Finance Minister Thomas Isaac said that no consensus could be reached on the rate to apply on gold, and that the next meeting of the GST Council has been fixed for June 4.
"We could not come to a decision in this meeting on the rate to apply on gold," Issac said.
The council had yesterday 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.
"Services, which are at currently taxed 15 per cent will be fitted into the 18 per cent bracket. However, services will get the benefit of input tax credit for the goods used, so real incidence of taxation will be lower than the headline rate," Isaac added.
"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," he added.
Movie ticket prices may not come down after GST
With each passing day, the Goods and Service Tax (GST) is inching closer to its July 1 rollout. After the conclusion of two-day GST Council meet in Srinagar on Friday, Finance Minister Arun Jaitley said that cinema halls will be taxed at 28 per cent.
Notwithstanding the effective tax cut on cinema halls under GST due to subsuming of entertainment taxes, movie ticket prices may not change after GST rollout in July.
In an interview to CNBC TV 18, Nitin Sood, Chief Financial Officer at PVR Ltd said, "At 28 per cent, we hardly have any headroom to look at prices. Our Food and Beverage taxes would go up."
"Classifying cinema as luxury is complete shocker. In some states, we had zero or less than 10 per cent entertainment tax," added Sood.
However, states like Maharashtra levy more around 50 per cent entertainment tax on movie tickets. In Uttar Pradesh (UP) entertainment tax is around 30-40 percent.
In Karnataka, West Bengal and Kerala the entertainment taxes are around 30 per cent. Once GST is implemented, all these state entertainment taxes will be subsumed in the Goods and Service Tax.