Telecom sector disappointed with GST rates

Briefing reporters here after the two-day meeting of the Council, Finance Minister Arun Jaitley said telecom and financial services will be taxed at a standard rate of 18 per cent.

The Goods and Services Tax (GST) Council on Friday finalised tax rates for all services, except lottery, under the new indirect tax regime to be rolled out from July 1. Non-AC train travel will be exempt and the 5 per cent will be levied on AC travel tickets.

Popular cab services like Ola and Uber would also get cheaper as they would move from the current 6 per cent to 5 per cent tax slab.

Services like telecom, business class air travel, insurance and sale of newspaper space for advertisement will cost more under the GST regime. There is also a list of products that are termed "essential" and will attract 0% Goods and Services Tax.

Meanwhile, prices of televisions, refrigerators and air-conditioners would go up by 4-5 per cent as they would fall under the 28 per cent tax slab.

The tax rate on non-AC restaurants will be 12%.

Jaitley on Friday said, "Cinema halls are now paying a service tax of 15 per cent plus a state entertainment tax that ranges from 28 per cent to about 100 per cent".

Entertainment tax will be merged with service tax under the GST and a composite 28 per cent levy charged on cinema services as well as gambling and betting at race course.

Preliminary analysis show that a hosuehold now spending Rs 74,350 per month will see a saving of Rs 2000 per month from July 1, 2017 as GST comes into force.

"Telecom industry hails GST as an iconic reform but we are disappointed with announced rate of 18%". As against the present system where tax arbitrage plays an important role for manufacturers, a seamless tax treatment in the GST regime will eliminate the need of multiple warehouses across states. "If this goes directly up to 28 per cent, it is a negative impact", Sanghvi said.

E-commerce players like Flipkart, Snapdeal will have to deduct 1 per cent TCS (tax collected at source) while making payments to suppliers, Adhia said.

This is published unedited from the PTI feed.

  • Zachary Reyes