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GST Council to Finalize Service Tax Rates Soon

The GST Council's fitment committee is set to convene this week to establish the framework for categorizing various services within the four-tier GST tax structure. The committee's objective is to minimize inflationary impacts and ensure minimal price changes. Expectations are that services currently under both VAT and service tax will fall into the 18% slab, while some services may shift to the 12% slab, potentially affecting costs marginally.

📖 1 min read read🏷️ GST Rates

Updates from April 17, 2017

The Goods and Services Tax (GST) Council's fitment committee, comprising tax officials from both central and state governments, is scheduled to convene this week. Their primary objective is to establish a framework for categorizing various services within the four-tier GST tax structure. A key aim for the committee is to mitigate inflationary effects and ensure that any price adjustments are minimal or entirely avoided.

Anticipation suggests that services currently subject to both Value Added Tax (VAT) and service tax will likely be placed in the 18% GST tax bracket. Conversely, services presently taxed at 12.5% under VAT may transition to a 12% GST rate. This 12% bracket could also apply to the transportation and logistics sectors. Additionally, services currently incurring a 9% tax rate might also be moved to the 12% slab, potentially leading to slight cost increases for these services.

This information was reported by Mint.

Further Reading

Frequently Asked Questions

What is the Goods and Services Tax (GST) in India?
The Goods and Services Tax (GST) is an indirect tax used in India on the supply of goods and services. It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
How many tax slabs does the Indian GST system have?
The Indian GST system primarily features four main tax slabs: 5%, 12%, 18%, and 28%, in addition to a few exempt categories and special rates for certain goods like precious stones.
What is the purpose of the GST Council?
The GST Council is the governing body for GST, responsible for making recommendations to the Union and State Governments on issues related to GST, including tax rates, rules, and procedures.
How does GST impact pricing for consumers?
GST aims to streamline indirect taxation, potentially leading to lower prices for some goods and services due to the removal of cascading taxes, while others might see slight increases depending on their original tax rates and the new GST slab.
What is Input Tax Credit (ITC) under GST?
Input Tax Credit (ITC) allows businesses to claim credit for the GST paid on the purchase of goods and services used for business purposes, thereby reducing their overall tax liability.

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