GST makes economy class air travel cheaper from July 1

Union Finance Minister Arun Jaitley on Friday said that the Goods and Services Tax (GST) Bill, which is to exempt the daily-use commodities from the levy, is going to be more efficient and a consumer friendly taxation system.

The GST Council has finalised four tax rates of 5, 12, 18 and 28 per cent to apply on services including telecom, insurance, hotels and restaurants.

Food grains will cost less from July 1 when the nation-wide Goods and Service Tax (GST) is rolled out as the GST Council on Thursday chose to exempt the daily-use commodities from the levy.

The government should realise countries like myanmar, thailand, singapore, Indonesia and others levy taxes ranging from 5 to 10 per cent. India can not afford to have these kind of complex and high GST, HRAWI President Dilip Datwani said.

It seems that 81 percent of the items are under 18 percent GST while only the luxury items are at a high tax of 28 percent. Saudi Arabia plans to do it in 2018.The CGST Bill also provides for e-commerce companies to collect tax at source at a rate not exceeding 1% of net value of taxable supplies.The new GST Bill is not applicable for the Northeastern and hill states with annual turnover below Rs.10 lakh.

"Government's decision to levy 5 per cent and 12 per cent tax on the economy and business class is a very good decision which will continue to support affordable fare regime in India". For air-conditioned restaurants, the tax rate will be 18 percent.

Your local taxi rides in cab aggregators Ola and Uber will be taxed at 5% - the lowest slab for services under GST.

Jaitley said the luxury category of 28 per cent includes five star hotels, gambling, race clubs, betting and cinemas.

Seven percent of the items fall under the exemption list while 14 percent have been put in the lowest tax bracket of 5 percent.

Earlier, the GST Council chose to exempt the daily-use commodities from the levy.

The Goods and Services Tax (GST) on coal has been brought down to 5 per cent from the current tax incidence of 11.69 per cent, thereby making electricity generation cheaper.

The GST rates for goods like gold and beedi, and services are to be decided in a meeting that will be convened on Friday, and the congregation may come together once again, if any decisions remain pending.

The rate imposed by the council will cause locally manufacture devices to cost more, which now enjoy low tax rates. Moreoever, entertainment under GST too has been reduced to a 28% GST as against 30% tax earlier. The new tax is likely to be non-inflationary as the government has kept a majority of food items, with a combined weighting of almost 50 per cent in the consumer price index, out of the tax net.

Several analysts have opined that consumers may have to bear the brunt of the higher tax.

Considering the massive impact of GST the operators have already initiated the registration process involving migration to the GST regime, the COAI said.

  • Zachary Reyes