By TIOL News Service

SRINAGAR, MAY 20, 2017: QUITE predictably, the GST Council has gone for four-tier tax rates for even the Services. And the rationale is - huge diversity in the nature of services and also service providers. Secondly, services account for the larger share of the GDP now. So, the Council has approved 5%, 12%, 18% and 28% tax rates like the goods. Then, there would be no addition to the list of exempted services and education & health are completely exempted, said the Council's Chairman, Mr Arun Jaitley.

With the abatement being grandfathered, the lower rate of 5% will apply to essential services like transport, economy air travel, AC train travel and cab charges. However, local train and metro services would be exempted. Business class air travel would now attract 12% tax.

The burden on telecom and insurance would go up with the Council Members favouring 18% tax rate.

Cinema, betting & gambling and race clubs have come to be seen as luxury services and thus, they have been placed in the 28% slab.

For the restaurant service, Mr Jailey said that if one has a turnover of less than Rs 50 lakhs, the tax rate would be 5%; for non-AC restaurants above Rs 50 lakh it would be 12% and for AC restaurants with liquor licence the mean rate of 18% would apply. For 5-star hotels, the highest slab of 28% would come into force. Hotels and lodges below Rs 1000 a day would be exempted and between Rs 1000 to Rs 2500 a day would attract 12% tax rate.

Talking about the controversial and litigation-prone lottery there would be no tax under the GST regime. Works Contract Service has been brought under 12% tax slab.

To sort out the issue of GST rate on gold the Council is going to meet again on June 3 in Delhi.

No sooner the rates were made public, the auto sector experts have voiced concern over high tax rate on hybrid cars and new environment-friendly technology in the making. Some have even indicated that thanks to lower rate of 43% on SUV, the prices would soon be lowered after the GST is implemented.