Education and Healthcare Kept Out of GST Regime

Speaking at the press conference held after the 2 day GST Council meeting at Srinagar, Union Finance Minister Arun Jaitley announced that the (GST) will be rolled out on July 1, 2017. While announcing the tax rates, Jaitley maintained that education and healthcare will be exempted from the exempt from the Goods and Services Tax.

Four different tax rates were announced by the minister under the upcoming goods and services tax (GST) regime. In the biggest tax reform after the Independence of India, different tax brackets of 5%, 12%, 18% and 28% will be applicable based on services such as insurance, telecom, transportation services, restaurants, hotels, etc.

While informing that the effect of GST Bill will not be inflationary, the minister added that healthcare and education services will be excluded from this taxation scheme. Other details regarding the bill were also announced by Jaitley in Srinagar.

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Here are the major points of the GST Bill:

• Different services have been slotted into four different rates slabs. The starting is from 5% and 12%; then is the standard slab of 18% followed by the luxury bracket of 28%.
• Transport services including Railways and air transport have been categorised under the 5% category as their main input is petroleum – that is outside GST regime.
• Amongst hotels, non-AC hotels will be charged 12%, whereas, AC hotels have been categorised under the standard slab of 18%. Luxury hotels will be charged higher tax rates.
• Hotels and lodges that have tariffs below Rs. 1,000 will be exempt from the taxation. Hotels with tariffs between Rs. 2,500 and Rs. 5,000 have been categorised under the 18% slab. Luxury hotels and 5-star hotels will be charged a tax of 28%.
• Other entities under the 28% slab are race club betting and cinema.
• Telecom and financial services have been slotted under the 18% slab.
• E-commerce players will have to deduct 1% tax at source before paying suppliers. E-retailers like Snapdeal and Flipkart and Snapdeal will have to pay GST.
• Ola, Uber and other such cab aggregators will have to pay 5% tax under GST.
• Air travel through economy class has been kept under the 5% slab, whereas, business class will fall under the 12% slab.
• Healthcare and education will not be included in the GST regime.

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The council is yet to announce the tax slab for gold and tobacco based products. The decision will be finalised in the council meeting scheduled for June 3, 2017. No changes will be made to the list of services that are exempted from the GST.