Taxation of Services under GST

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Taxation of Services under GST

The GST Council, on the second day of its 2-day meeting in Srinagar, has considered and finalised GST rates to be applicable for different types of services. In brief some key aspects related to services decided at the meeting are as below :

1) As against expectations, the government has finalised four tax rates that will apply to services, namely 5%, 12%, 18% and 28%.

2) Education and Healthcare services to be exempted under GST

3) Transportation services to be taxed at 5%. Aggregators like Ola and Uber to be taxed at 5%

4) Economy class air travel to attract 5% GST and business class 12%

5) Works Contract set to be taxed at 18%

6) 5 Star and AC restaurants to attract higher taxes.

  • Restaurants with a turnover of INR 5 million or less will levy 5% GST.
  • Restaurants without a liquor license and with a turnover higher than INR 5 million will be charged 12% GST.
  • AC restaurants and restaurants with a liquor license to fall under the 18% tax slab

7) 5 Star hotels to levy 28% GST.

  • Hotels with tariff below INR 1000 to be exempted.
  • Hotels with tariff of INR1000-2500 will levy 12% GST.
  • Hotels with tariff above INR 2500 but below INR 5000 would attract 18% GST.
  • Hotels with tariff above INR 5000 to charge 28% GST

8) Telecom and Financial services to attract 18% GST

9) The highest tax slab i.e. 28% would be reserved for luxury services like cinemas, betting, etc

10) No consensus on the fixation of rate on gold

11) General rate of 18 % applicable to services where rate not otherwise stated