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GST Council Considers Implementing Dual Tax Slabs for Services

The GST Council's fitment committee is actively exploring a dual tax slab system for services, proposing rates of 12% and 18%. This initiative aims to potentially reduce tax burdens on essential services while maintaining balance within the sector. Such an approach contrasts with a uniform 18% GST, which might lead to higher prices across all services and negative sector impacts. This move reflects a consideration for consumer affordability, especially for commonly used services.

📖 1 min read read🏷️ GST Rates for Services

GST Council Considers Implementing Dual Tax Slabs for Services

Updates from April 21st, 2017

Previously, a flat 15% tax applied to most services, with 17 specific exemptions. The GST Council's fitment committee is now evaluating whether a single 18% tax rate or a dual-slab system (12% and 18%) would be more appropriate for services. A two-slab structure could balance the sector by lowering costs for certain services while raising them for others.

Conversely, a uniform 18% GST could lead to higher prices across all services, potentially impacting the sector adversely. Despite initial intentions for a single tax rate, discussions include placing essential services, frequently used by the general public, into the 12% bracket to lessen consumer tax burdens.

As reported in Moneycontrol.

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Frequently Asked Questions

What is Goods and Services Tax (GST) in India?
GST is an indirect tax applied to the supply of goods and services in India. It replaced multiple cascading taxes levied by the central and state governments, streamlining the tax structure.
How are GST rates determined in India?
GST rates are recommended by the GST Council, a joint forum of the Centre and States. The Council considers various factors, including the essentiality of goods/services, revenue implications, and industry feedback, to finalize the rates.
What is the primary role of the GST Council?
The GST Council is the governing body for GST in India. Its main role is to make recommendations to the Union and State Governments on various aspects of GST, including tax rates, rules, exemptions, and administrative procedures.
Are all services subject to GST in India?
While most services are covered under GST, there are specific services that are either exempt from GST or attract a NIL rate, typically essential services or those with social implications.
How does the implementation of GST impact Indian consumers?
GST aims to create a 'one nation, one tax' regime, reducing the cascading effect of taxes and potentially lowering prices for some goods and services. However, the actual impact on consumers depends on the specific GST rates applied to various products and services they consume.

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